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A-1.ObjectivesofPartFinancialNon-FinancialTheusualassumptioninfinancialmanagementfortheprivatesectoristhattheprimaryfinancialobjectiveofthecompanyistomaximiseshareholders'wealth.MarketvalueofsharesMarketvalueofValue!PresentvalueoffuturecashShareholderwealthisbasedonlong-termcashflows,andisdeterminedbythepresentvalueofthefuturecashflowscalculatedatadiscountratereflectingtherisksinvolved.OtherFinancialFinancialtargetsmayincludetargets revenue cost earningsor gearing dividendper profit operatingProfit?Whycannotfocusonprofit?WhyCFismoreimportantthanAlthoughprofitsdomatter,theyarenotthebestmeasureofacompany'sachievements.Accountingprofitscanbemanipulatedtosomeextentbychoicesofaccountingpolicies.InvestorsfocusoncashProfitsmeasuresofshort-termProfitdoesnotreflectProfitcanbelowqDifferentoperatingqDiversification/innovationofproductqThewelfareofemployees/managementqTheprovisionofaserviceqBuildupcustomerqThefulfilmentofresponsibilitiestowardscustomersqThefulfilmentofresponsibilitiestowardssuppliersqThewelfareofsocietyasawholeqEnvironmentalThewealthoftheshareholderscomesqDividendsqMarketvalueoftheAshareholder'stotalreturnofaperiodisobtainedintheformof:qDividendsqCapitalgainsfromincreasesinthemarketvalueofhisorhersharesTotalshareholderreturn=dividend+capital$=Dividend+(Closeprice–Open%=dividendyield+capitalgainAshareholderpurchased1,000sharesinSJGCoon1Januaryatamarketpriceof$2.50pershare.On31Decembertheshareshadanex-divmarketvalueof$2.82pershare.Thedividendpaidduringtheperiodwas$0.27pershare.Whatisthetotalshareholderreturnandwhataretheelementsoftotalshareholderreturn?Thetotalshareholderreturn($2.82–$2.50+$0.27)/$2.50=0.24orThisismadeupcapitalgain(P1–P0)/=($2.82–$2.50)/$2.50=0.13ordividendyieldD1/=$0.27/$2.50=0.11orPrimaryMostfinancialmanagementtheoryisdevelopedassumingthatthemaximisationofshareholderweatheristheobjectiveofthebusiness.Inrealworld,however,itsvaliditycanbeTwofactorsneedtobe ObjectivesofotherqThedivorceofownershipandcontrol(agencyWhichofthefollowingwouldyouexpecttobetheresponsibilityoffinancialmanagement?AProducingannualBProducingmonthlymanagementCAdvisingoninvestmentinnon-currentDDecidingpayratesforWhichofthefollowingstatementsconcerningfinancialmanagementarecorrect?Itisconcernedwithinvestmentdecisions,financingdecisionsanddividenddecisionsItisconcernedwithfinancialplanningandfinancialItconsidersthemanagementofA1and2B1and3C2and3D1,2andAllthreestatementsconcerningfinancialmanagementareTKQCohasjustpaidadividendof21centspershareanditssharepriceoneyearagowas$310pershare.Thetotalshareholderreturnfortheyearwas197%.WhatisthecurrentshareA$350B$371C$331D$335Monetaryvalueofreturn=$310x1197=$371Currentshareprice=$371–$021=$350WhichofthefollowingstatementsareMaximisingmarketshareisanexampleofafinancialShareholderwealthmaximisationistheprimaryfinancialobjectiveforacompanylistedonastockexchangeFinancialobjectivesshouldbequantitativesothattheirachievementcanbemeasuredA1and2B1and3C2and3D1,2andWhichofthefollowingisLEASTlikelytofallwithinfinancialmanagement?ThedividendpaymenttoshareholdersisFundsareraisedtofinanceaninvestmentSurplusassetsaresoldNon-executivedirectorsareappointedtotheremunerationcommitteeWhichofthefollowingstatementsconcerningprofitareAccountingprofitisnotthesameaseconomicProfittakesaccountofAccountingprofitcanbemanipulatedbyA1and3B1and2C2and3D1,2andThankA-2.NotForProfitqNon-for-profitNFPorganisationsarecreatedtobringbenefitstothecommunity.qANFPorganisationmayengageinrevenue-producingactivitiesandearnaprofitundercertainqhowevertheaimoftheseactivitiesmustbesolelytofurthertheprincipalobjectivesoftheorganisation.Sincetheamountoffundingavailableislimited,NFPorganisationswillseektogeneratethemaximumbenefitfromavailablefunds.Valueformoneycanbedefinedasgettingthebestpossiblecombinationofservicesfromtheleastresources,whichmeansmaximisingthebenefitsforthelowestpossiblecost.Theywillobtainresourcesforusebytheorganisationaseconomicallyaspossible;theywillemploytheseresourcesefficiently,minimisingwasteandcuttingbackonanyactivitiestheydonoassistinachievingtheorganisation'snon-financialobjectives;andtheywillensurethattheiroperationsaredirectedaseffectivelyaspossibletowardsmeetingtheirThegoalsofeconomy,efficiencyandeffectivenessarecollectivelyreferredtoasvalueformoney(VFM).qEffectivenessistheextenttowhichdeclaredobjectives/goalsaremet.qEfficiencyistherelationshipbetweeninputsandqEconomyisattainingtheappropriatequantityandqualityofinputsatlowestcosttoachieveacertainlevelofoutputs.

Fulfillfewstakeholders Balanceof Governmentand MoreProfitand

NoeasywaytodeterminebyeconomicvalueProfit:ValueformoneyCost:Socialbenefit

Valueformoneyisanimportantobjectivefornot-for-profitWhichactionisLEASTconsistentwithincreasingvalueformoney?Usingacheapersourceofgoodswithoutdecreasingthequalityofnot-for-profitorganisationservicesSearchingforwaystodiversifythefinancesofthenot-for-profitorganisationDecreasingwasteintheprovisionofaservicebythenot-for-profitorganisationFocusingonmeetingtheobjectivesofthenot-for-profitAnswerThankA-3.StakeholdersandAgencyAgencyShare Astakeholderisagrouporindividualthathasvestedinterestintheorganization.Theyareaffectedbywhatacompanydoes,eitherpositivelyornegatively. Organisationsrequirecontributionsfromvariousgroupsandindividualsinordertosucceed.Theirstakeholdersallhavetheirownobjectives,whichusuallyconflictwiththoseofotherstakeholders. Amorebalancedviewofreturnmaybetoconsiderthecompanyashavinganumberofdifferent‘stakeholders’inadditiontotheshareholders.

Debtholders(bondholders)LocalandnationalcommunitiesProfessionalandregulatorybodiesAgencyAdescriptionoftherelationshipbetweenmanagementandshareholdersexpressingtheideathatmanagersactasagentsfortheshareholder,usingdelegatedpowerstorunthecompanyintheshareholders'bestinterests.Conflictofinterestsbetweenmanagersand Shareholdersinfirmsoftenearnlargefinancialreturnsfromsuccessfultakeovers.Ontheotherhandmanagersofcompanieswouldlosetheirjobs.qTimeManagersmaytakeashort-termviewoffirmwhichisintheirbestinterest.However,shareholderwealthisaffectedbythelong-termperformanceofthefirm.ConflictofinterestsbetweenmanagersandqManagersmaybeonlywillingtoacceptarelativelylowlevelofriskcomparedtoshareholders,especiallytheshareholdersholdwell-diversifiedportfolio.AgencyCostDirectagencycost:?Excessive?MonitoringIndirectagencyTheopportunitiesthatarenottakenupbymanagement,butwouldhavebeentakenupbyshareholdershadtheymakethedecisionontheirownbehalfManagerialrewardGoalcongruenceisaccordancebetweentheobjectivesofagentsactingwithinanorganisationandtheobjectivesoftheorganisationasawhole.ExamplesofsuchremunerationincentivesRewardingmanagerswithExecutiveshareoptionsplansRegulatoryTheachievementofstakeholderobjectivescanbeenforcedusingregulatoryrequirementssuchascorporategovernancecodesofbestpracticeandstockexchangelistingregulations.Rightbutnotobligationstobuyshareinthefutureatanagreedprice.Manyexecutivesreceivecalloptionsontheirowncompany’ssharesaspartoftheirremunerationpackagesinordertomotivatethemtofocustheiractionsonincreasingtheshareqGoalcongruence:Aligningtheobjectivesofmanagersandshareholdersbothgroupsbenefitasaresultofanincreasingshareprice.qImprovestaffmotivationandretentionandthuslowerexpensivestaffturnovercosts.ShareAlsonamedFinancialCall 買入期權(quán)看漲（多）Put 賣出期權(quán)看跌（空） 多頭做多 空頭看空WhichofthefollowingactionsisLEASTlikelytoincreaseshareholderwealth?TheweightedaveragecostofcapitalisdecreasedbyarecentfinancingdecisionThefinancialrewardsofdirectorsarelinkedtoincreasingearningspershareTheboardofdirectorsdecidestoinvestinaprojectwithapositiveNPVTheannualreportdeclaresfullcompliancewiththecorporategovernancecodeAnswerIncreasesinshareholderwealthwilldependonincreasesincashflow,ratherthanincreasesinearningspershare,i.e.increasesinprofit.Ifthefinancialrewardsofdirectorsarelinkedtoincreasingearningspershare,forexample,throughaperformance-relatedrewardscheme,thereisanincentivetoincreasingshort-termprofitattheexpenseoflongergrowthincashflowsandhenceshareholderwealth.WhichofthefollowingstatementsareShareoptionschemesalwaysrewardgoodperformancebymanagersPerformance-relatedpaycanencouragedysfunctionalValueformoneyasanobjectiveinnot-for-profitorganisationsrequiresthepursuitofeconomy,efficiencyandeffectivenessA1and2B1and3C2and3D1,2andThankA-4.FinancialProfitabilityandDebtandLiquidity,controlofcashandotherworkingcapitalProfitGrossProfitMargin=GrossOperatingProfitMargin=PBIT(OperatingProfit)/SalesNetProfitMargin=ProfitafterInterestandTax(PAT)/SalesReturnoncapitalemployedThemostimportantprofitability,alsocalledreturnoninvestment(ROI).Returnoncapitalemployed=PBIT/CapitalemployedCapitalemployed=Shareholders'fundspluslong-term=TotalassetslesscurrentAssetsTurnover=Sales/CapitalThisratioillustrateshowefficientlytheassetsarebeingusedtogeneratesales.ReturnonAnothermeasureofthefirm'soverallperformanceisreturnonThiscomparesnetprofitaftertaxwiththeequitythatshareholdershaveinvestedinthefirm.ROE=Earningsattributabletoordinaryshareholders/Shareholder'sROCEvsROCE=PBIT/(Debt+ROE=qROCEmeasureshowmuchprofitweearnfrominvestment(capitalemployed).qROEmeasureshowmuchprofitacompanygeneratesforitsordinaryshareholderswiththemoneytheyhaveinvestedinthecompany.Financialgearing=Priorchargecapital/EquityFinancialgearing=Priorchargecapital/(Equitycapital+PriorchargeInterestcoverage=Profitbeforeinterestandtax/CurrentRatio=Currentassets/CurrentQuickRatio(acid=(Currentasset–inventory)/CurrentInventorydays=(inventorybalance)/costofsalesReceivabledays=receivablebalance/creditsalesPayabledays=payablebalance/costofsalesqCumdividendorcummeansthepurchaserofsharesisentitledtoreceivethenextdividendpayment.qExdividendorexmeansthatthepurchaserofsharesisnotentitledtoreceivethenextdividendpayment.Marketpricepershare(ex=Marketpricepershare(cumdiv)–forthcomingdividendpershareEarningsper=Profitdistributabletoordinaryshareholders/WeightedaveragenumberofordinarysharesLimitationsof Doesnotrepresentactualincomeof Earningsarenotdirectlylinkedtotheobjectiveofmaximizingshareholderwealth. EarningcanbeeasilyDividend=Dividendpershare/Ex-divmarketpriceper?Thedividendyieldisthereturnashareholderiscurrentlyexpectingonthesharesofacompany.?Thedividendpershareistakenasthedividendfortheprevious?Ex-divmeansthatthesharepricedoesnotincludetherighttothemostrecentdividend.Priceearningsratio=marketpriceofshare/?TheP/Eratiosisameasureoffutureearningsgrowth,itcomparesthemarketvaluetothecurrentearnings.?ThehighertheP/Eratio,thegreaterthemarketexpectationoffutureearningsgrowth.ThismayalsobedescribedasmarketPeachCo’slatestresultsareasProfitbeforeinterestandtaxation Profitbeforetaxation Profitafter Inaddition,extractsfromitslateststatementoffinancialpositionareasfollo