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    Financial management involves planning, organizing, directing, and controlling financial activities such as raising funds and proper utilization of funds. It plays an important role in maximizing shareholder wealth and ensuring profitability. The capital structure of a company is determined by factors such as debt-equity ratio, interest rates, profitability, asset structure, and financial risk. Over-capitalization means a company has more capital than needed while under-capitalization means insufficient capital that can lead to higher financial risk and market value fluctuations. When determining working capital requirements as a finance manager, one would consider factors like expected sales level, inventory policy, credit period, operating cycle, and cash operating expenses.

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    Financial management involves planning, organizing, directing, and controlling financial activities such as raising funds and proper utilization of funds. It plays an important role in maximizing shareholder wealth and ensuring profitability. The capital structure of a company is determined by factors such as debt-equity ratio, interest rates, profitability, asset structure, and financial risk. Over-capitalization means a company has more capital than needed while under-capitalization means insufficient capital that can lead to higher financial risk and market value fluctuations. When determining working capital requirements as a finance manager, one would consider factors like expected sales level, inventory policy, credit period, operating cycle, and cash operating expenses.

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    BST - Exam - Financial Management

    Uploaded by

    informacp
    Financial management involves planning, organizing, directing, and controlling financial activities such as raising funds and proper utilization of funds. It plays an important role in maximizing shareholder wealth and ensuring profitability. The capital structure of a company is determined by factors such as debt-equity ratio, interest rates, profitability, asset structure, and financial risk. Over-capitalization means a company has more capital than needed while under-capitalization means insufficient capital that can lead to higher financial risk and market value fluctuations. When determining working capital requirements as a finance manager, one would consider factors like expected sales level, inventory policy, credit period, operating cycle, and cash operating expenses.

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    BST– Revision Exam – Financial Management

    Date: 07-Feb-23 Answer any Six Marks: 6*5 = 30

    1. Explain the term financial management? Briefly discuss its importance


    2. List any 5 factors determining the capital structure?
    3. Distinguish between over – capitalisation and under capitalisation?
    4. “One of the effects of under – capitalisation is that the market value of shares goes up.
    But still under capitalisation is not considered good for the company”. Do you agree with
    this statement?
    Give reasons in support of your answer.
    5. You are the finance manager of a newly established company. The directors have asked
    you to determine the amount of working capital requirements for the company. State any
    5 factors that you would take into consideration while determining the amount of working
    capital requirements of the company.
    6. What are the functions performed by the financial manager?
    7. State the factors affecting the dividend policy of a company?
    8. What is financial risk?
    9. Write the difference between fixed and working capital?

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