Finance

Question 1

Role

Answer 1

Strategic role of financial management
Objectives of financial management (PLEGS)
Interdependence with other KBF’s

Question 2

Role - objectives of financial management

Answer 2

PLEGS
Profitability, growth, efficiency, liquidity and solvency
Short term and long term

Question 3

Influences

Answer 3

SIGG
Sources of finance (internal vs external)
Financial Institutions
Influence of Government 
Global market

Question 4

Influences

Answer 4

Internal sources of finance
External sources of finance
Financial institutions
Influence of government
Global market influences

Question 5

Influences - internal sources of finance

Answer 5

Retained profits

Question 6

Influences - external sources of finance

Answer 6

Debt - ST and LT

Question 7

Short term sources of borrowing

Answer 7

Overdraft, commercial bills and factoring

Question 8

Long term sources of borrowing

Answer 8

Mortgages, debentures, unsecured notes and leasing

Question 9

Debt - equity - sources of external finance

Answer 9

Ordinary shares - New issues, rights issues, placements, share purchase plans
Private equity

Question 10

Influences - financial institutions

Answer 10

BUF SAIL
Banks
Unit trust
Financial companieis
Superannuation funds
ASX
Investment banks
Life insurance companies

Question 11

Influences - influence of government

Answer 11

Australian Securities and investment Commission (ASIC)

Company tax

Question 12

Influences - Global market influences

Answer 12

Economic outlook, availability of funds, interest rates

Question 13

Process

Answer 13

PIMFLE
Planning
And Implementing
Monitoring and controlling
Financial ratios
Limitations of financial reports
Ethical issues related to financial reports

Question 14

Processes - planning and implementing

Answer 14

Red and Blue CorNeR
Financial needs, budgets, record systems, financial risks, financial controls
- Debt and equity - advantages and disadvantages of each
- matching the terms and source of finance to business purpose

Question 15

Processes -monitoring and controlling

Answer 15

Cash flow statement
Income statement
Balance sheet

Question 16

Processes - financial ratios - LIQUIDITY

Answer 16

Current ratio (current assets/ current liabilities), WCR 2:1 acceptable

Question 17

Processes - financial ratios - GEARING

Answer 17

Solvency, debt : equity ratio 0.5-0.7: 1
High gearing = high ratio (less solvent)
Low gearing = low ratio

Question 18

Processes - financial ratios - PROFITABILITY

Answer 18

GPR (GP/ Sales)
NPR (NP/Sales)
ROE (NP/ Total expenses)
% HIGH

Question 19

Processes - financial ratios - EFFICIENCY

Answer 19

Expenses (expenses/ sales)

ARTR (sales/ ac rec) = times -> 365/ times = days

Question 20

Processes - financial ratios - comparative ratio analysis

Answer 20

Over different time periods, against standards, with similar businesses

Question 21

Processes - limitations of financial reports

Answer 21

"DR CEN has TINEA"
DR - Debt repayments
CE - Capitalising expenses
N - Notes to financial statements
TI - Timing issues
NE - Normalised earnings
A - Asset valuation

Question 22

Strategies

Answer 22

(Good work charlies pe)
Global financial mangement
Working capital management
Cash flow management
Profitability management

Question 23

Strategies - cash flow management

Answer 23

Cash flow statements

Distribution of payments, discount of early payment, factoring

Question 24

Strategies - working capital management

Answer 24

Control of current assets - cash, receivables, inventories
Control of current liabilities - payables, loans, overdrafts
Strategies - leasing, sale and lease back

Question 25

Strategies - profitability maangement

Answer 25

Cost control - fixed and variable, cost centres, expense minimisation Revenue controls - marketing objectives

Question 26

Strategies - global financial managment

Answer 26

``` HM DIE Exchange rates Interest rates Methods of international payments - payment in advance, letter of credit, clean payment, bill of exchange Hedging Derivatives ```