Objectives

Question 1

What is the main objective of financial management?

Answer 1

To maximise shareholder wealth.

Question 2

Who acts as the shareholders agents?

Answer 2

Directors.

Question 3

Name 5 stakeholders.

Answer 3

Employees, environmental pressure groups, government, managers and customers.

Question 4

What’s an “Agency Cost”?

Answer 4

Where interests conflict, directors may act in their own interests rather than the interests of the shareholders (e.g. rejecting a takeover bid).

Question 5

When marketing themselves and their work, professional accountants should:

Answer 5

• Be honest and truthful.
• Avoid making exaggerated claims about (a) what they can do (b) their qualifications and experience.
• Avoid making disparaging references to the work of others.
• Not use confidential information from other clients in the campaign.