Assignment: For PMCF8 Module 1: Review Questions

Assignment: For PMCF8 Module 1
REVIEW QUESTIONS:
1. What are the Scope and Objectives of Financial Management? Explain

briefly.
The wealth maximization notion refers to the primary goal of financial management, which is
to maximize shareholder wealth. Profit maximization is the primary goal of financial
management. The financial manager's goal is to maximize short- and long-term earnings for the
company. This is because a company's money belongs to its shareholders, and their market
worth or price is determined by how they are invested and the return they make. It refers to the
goal of increasing the market value of a company's stock. If the advantages of an action
outweigh the costs, the market price of an equity share rises. It's critical that financial decisions
consider the interests of shareholders. They are also supported by the maximizing of
shareholder wealth, which is based on an increase in net worth, capital invested in the firm, and
earnings plowed back into the business for the organization's growth and prosperity. The major
scope of financial management is the investment decision, financing decision and dividend
decision.
2. Explain the Scope of Finance Functions.
First, the Financing Decisions which involves assessing risk, calculating the cost of capital,
and estimating the potential rewards of a project. The two most important factors in making an
investment decision are capital budgeting and liquidity. Capital budgeting is concerned with the
allocation of capital and the investment of funds in long-term assets that will generate future
earnings. While Investment Decisions are concerned with asset composition or mix, financing
decisions are concerned with the firm's financing mix or financial structure. The decision to raise
funds necessitates consideration of the techniques and sources of funding, the relative
percentage and choice of different sources, the time of flotation of securities, and so on. To
maximize the long-term market price of the firm's shares, the finance manager must establish
the best finance mix or optimum capital structure for the company. At last, proper Dividend
Decisions policy must be devised in order to meet the wealth maximization goal. The financial
manager should think about the company's investment potential, expansion and growth
strategies, and so on.
3. What is Financial Management and discuss its importance.
Financial management is strategic planning, organizing, directing, and controlling of financial

undertakings in an organization or an institute. It also includes applying management principles
to the financial assets of an organization, while also playing an important part in fiscal
management. The importance of financial management is financial planning. It determines all
financial requirements related to a corporate enterprise. Financial planning appears to be an
important aspect of any organization. Typically, a company's financial planning receives the
majority of the credit for its success. And also safeguarding funds in order to achieve corporate
objectives, to properly allocate finances. When properly allocating finance to assets, the
business concern's operational proficiency improves. And you will have opportunities to explore
investment, which is a financial decision. The only way to assure financial stability is through
economic growth, which can only be achieved through financial management. It also improves
the standard of living, financial specialists may help improve a company's valuation, your
financial planning should also involve tax planning, and in the success of a firm via ways of
expanding as well as establishing capital reserves in the company's books of accounts.
4. What are the Different Types of Financial Management? Briefly explain.
First, Treasury and Capital budget Management is the process of determining whether a
company's fixed assets are worth investing in. These management teams are also responsible
for generating and investing funds. If a business merges with another or expands, the team will
help with the financial aspects of the merger or expansion. Second, a capital structure
management refers to how it finances itself through a combination of debt and equity securities.
This financial management team is in charge of a company's short-term obligations, long-term
debts, equities, preferred stocks, and other capital structures. Lastly, a working capital
management refers to the bookkeeping and accounting procedures used to maintain track of
current assets, current liabilities, cash flow, inventory turnover ratio, working capital ratio, and
other metrics. Working capital management's primary goal is to guarantee that the company has
enough liquid cash on hand to pay its short-term obligations and operating expenses.

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Assignment: For PMCF8 Module 1

1. What are the Scope and Objectives of Financial Management? Explain

2. Explain the Scope of Finance Functions.

Financial management is strategic planning, organizing, directing, and controlling of financial

4. What are the Different Types of Financial Management? Briefly explain.

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