Week 4 CFO Flashcards

1
Q

What are the dual roles of a CFO?

A
  1. fiduciary role: producing financial statements
  2. decision-making role: support management
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2
Q

What is strategic cost management?

A

Aligning the costs to the business strategy. Emphasis is on information which relates to factors external to the firm and non-financial and internally-generated information.

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3
Q

What are the 2 types of cost-driver analysis within the firm?

A
  1. Structural: long-term
  2. Executional: short-term
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4
Q

What does the research of Henri et al.(2016) tells us about Strategic cost management?

A

1: Identification of environmental costs increases cost consciousness –> increases financial performance.

2: Tracking environmental costs raises awareness in organisation –> implementation of environmental contributes leads to –> increase in financial performance

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5
Q

What is a business model (BM)?

A

System of interdependent activities as well as the resources and capabilities to perform them –> affects performance potential (Capex, margins etc.)

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6
Q

What does the paper of Huelsback et al. (2011), tells us about the Business Model?

A

Even though results show a weak support of the business model, management continued to express confidence in the validity of the model

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7
Q

Give 4 reasons why ESG is important for a firm?

A
  1. Long-term value creation (growing the pie)
  2. Shareholder and stakeholder welfare (sharing the pie)
  3. Exclude socially or environmentally undesirable practices
  4. risk management and compliance
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8
Q

What is true cost accounting?

A

Includes direct costs (internal to the firm) and externalities

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9
Q

What are the 3 advantages of true cost accounting?

A
  1. provides ‘real’ cost of production to organisations and customers
  2. provides insights in additional elements affected by production
  3. can be extended to the corporate level (integraded P&L)
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10
Q

What are 5 disadvantages of the True cost accounting approach?

A
  1. Not simple: cost elements differ
  2. valuation is subjective
  3. consumer does not pay the ‘true cost’
  4. extensive admin and controls
  5. puts nature under the rules of the market: if people can pay for it, they don’t care.
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