What kind of control procedure should the auditors recommend
What kind of control procedure should the auditors recommend
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Financial Management
Part
one:
Multiple
choice:
I. Investment
is the…
a)
Net additions made to the nation’s capital stocks
b)
Person’s commitment to buy a flat or house
c)
Employment of funds on assets to earn returns
d)
Employment of funds on goods and services that are used in production process
II.
Financial Management is mainly concerned with...
a) All
aspects of acquiring and utilizing financial resources for firms activities
b)
Arrangement of funds
c) Efficient
Management of every business
d) Profit
maximization
III. The
Primary goal of the financial management is…..
a.
To maximize the return
b.
To minimize the risk
c.
To maximize the wealth of owners
d. To
maximize profit
IV. In his
traditional role the finance Manager is responsible for
a.
Proper utilization of funds
b.
Arrangement of financial resources
c.
Acquiring capital assets of the organization
d. Efficient
management of capital
V. Market Value of the shares are
decided by
a. The respective companies
b. The investment market
c. The government
d. Shareholders
VI. The only feasible purpose of
financial management is
a. Wealth maximization
b. Sales maximization
c. Profit maximization
d. Assets maximization
VII. Financial management process deals with
a. Investments
b. Financing decisions
c. Both a and b
d. None of the above
VIII. Agency cost consists of
a. Binding
b. Monitoring
c. Opportunity and structure cost
d. All of the above
IX. Finance Function comprises
a. Safe custody of funds only
b. Expenditure of funds only
c. Procurement of finance only
d. Procurement & effective use of
funds
X. Financial management mainly
focuses on
a. Efficient management of every business
b. Brand dimension
c. Arrangement of funds
d. All elements of acquiring and
using means of financial resources for financial activities
Part Two:
1. What Is The Financial Management Reform?
2. Why Was The FMR Introduced?
3. What Changes Will The FMR
Introduce?
4. What Is Financial Management
Information System (FMIS)?
Section B: Caselets (40 marks)
Caselet 1
Your employer, a mid-sized human
resources management company, is considering expansion into related fields,
including the acquisition of Temp Force Company, an employment agency that
supplies word processor operators and computer programmers to businesses with
temporary heavy workloads. Your employer is also considering the purchase of a
bigger staff & McDonald (B&M), a privately held company owned by two
friends, each with 5 million shares of stock. B&M currently has free cash
flow of $24 million, which is expected to grow at a constant rate of 5%.
B&M’s financial statements report marketable securities of $100 million,
debt of $200 million, and preferred stock of $50 million. B&M’s weighted
average cost of capital (WACC) is 11%. Answer the following questions
Questions
1. Describe briefly the legal rights and
privileges of common stockholders.
Caselet 2
Casino is a large electrical
construction company having a turnover of Rs.100 crores per annum. Since a few
years the company has not been doing well in terms of profits. In order to find
out the reason, a group of independent auditors were deployed to examine the
operations of the company. The item they felt that needed closer attention was
the budget control of new construction work. The audit showed that most
electrical designs for new construction were carried out at the headquarters of
the company by a project manager. In preparing a budget for a new project, he
checked the expenses for similar jobs in the past, then simply multiplied them
by various factors. The auditors found that during the past two years, most
budgets were greatly overestimated. Incidentally, it was about two years ago that
the project manager was given the primary responsibility for budgeting. In this
role, he would submit his budget to the Expenditure Control Committee,
consisting of higher-level managers who had only a limited interest in
budgeting. It was to this committee that the project manager submitted requests
for additional money whenever needed. Most of the requests were approved.
The chief auditor felt that the
project team tended to "expand" the time needed to complete the task
whenever the members thought the budget made it possible. In other words, they
"adjusted" their productivity to match the money allocated to the
project.
The auditors noted that other
contractors could do similar jobs for 20% less money. They concluded that a new
control procedure was needed.
Questions
1. What do you think of the budgeting
process?
2. What kind of control procedure should
the auditors recommend?
Section C: Applied Theory
(30 marks)
1. Differentiate Between the Financial Management and
Financial Accounting?
2. Explain Briefly The Limitations of
Financial Ratios?
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| IIBM EMBA CASE LET ANSWER SHEETS - What kind of control procedure should the auditors recommend |
Assignment Solutions, Case study Answer sheets
Project Report and Thesis contact
www.mbacasestudyanswers.com
ARAVIND – 09901366442 – 09902787224
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