PROFESSIONAL PROGRAM – Page 79

MA – L2 – Q60 – Performance Analysis

Calculate the budgeted ROI for North Sector for the year to 31 December Year 7.

Question

PrimeCorp has several separate divisions, each operating as an investment centre within the group. North Sector makes and sells three products, A, B, and C. All three products are sold under the Apex brand label, but Product A and Product B are also sold through a supermarket group as unbranded products. Budgeted data for the year to 31 December Year 7 is as follows:

Product sales

	Product A	Product B	Product C
	units	units	units
Apex brand	160,000	120,000	50,000
Unbranded	450,000	600,000

Selling prices

	Product A	Product B	Product C
	GH¢ per unit	GH¢ per unit	GH¢ per unit
Apex brand	2.50	3.20	5.00
Unbranded	1.50	2.00

Variable costs

	Production	Packaging
	GH¢ per unit	GH¢ per unit
Product A:
Apex brand	1.20	0.30
Unbranded	1.20	0.10
Product B:
Apex brand	1.60	0.40
Unbranded	1.60	0.20
Product C:
Apex brand	2.50	0.50

Budgeted marketing expenditure is GH¢180,000 for the year, and other budgeted expenditure for other fixed costs is GH¢375,000. The average capital employed in North Sector in Year 7 is expected to be GH¢400,000 and the division’s cost of capital is 10%.

Required:
(a) Calculate the budgeted ROI for North Sector for the year to 31 December Year 7.

b) Calculate the budgeted residual income for North Sector for the year to 31 December Year 7.

Answer

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Tags: Divisional performance, Financial metrics, Investment centre, Performance Analysis, ROI
Level: Level 2

Topic: Performance Analysis

FM – L2 – Q12 – Economic and regulatory environment

Outline three unfair practices from GBA Bank's new AI-based credit assessment system.

Question

KWE Bank is part of a large financial services group in Kumasi, KWE Group. KWE Bank provides personal loans to individuals. In order to determine whether a customer is an acceptable credit risk for a loan to be offered, KWE has used the information provided by the customer in their application form together with an employer’s salary reference.

KWE intends to introduce a more sophisticated credit risk assessment system to determine whether loans should be advanced to customers. This system will combine information from the credit application with any information about the customer held by KWE Group and unstructured information about the customer obtained from their online activity. This data will be analysed by an AI-based credit assessment system that uses machine learning to improve the accuracy of its credit assessments over time.

Required:

Outline three ways in which KWE’s new credit assessment system may lead to practices that are likely to be viewed as unfair.

Answer

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Tags: AI technology, Banking, Credit assessment, Customer data, Data privacy, Discrimination, Ethical finance, Financial inclusion, Regulatory compliance, Technology risks
Level: Level 2

Topic: Economic and regulatory environment

FM – L2 – Q11 – Economic and regulatory environment

Explain five areas where government action impacts financial management decisions.

Question

The economic environment within which the financial manager must operate is subject to a variety of influences, a major one is from the government.

Required:

Explain FIVE areas in which government action might affect the problem solving and decision making roles of a Finance Manager.

Answer

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Tags: Credit controls, Economic policy, Exchange controls, Financial management, Government influence, Investment decisions, Taxation
Level: Level 2

Topic: Economic and regulatory environment

FM – L2 – Q10 – Economic and regulatory environment

Compare functions of IMF and World Bank, and explain IMF challenges in West Africa.

Question

INTERNATIONAL MONETARY FUND (IMF) AND THE WORLD BANK

The International Monetary Fund (IMF) and the World Bank are institutions in the United Nations system. They are twin intergovernmental pillars supporting the structure of the world’s economic and financial order.

Required:

(a) Compare and Contrast THREE functions of the International Monetary Fund (IMF) and the World Bank

(b) Explain TWO challenges being faced by the IMF in attaining its objectives in West African Countries

Answer

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Tags: economic challenges, IMF, international finance, policy implementation, West Africa
Level: Level 2

Topic: Economic and regulatory environment

FM – L2 – Q9 – Financial Policy Decisions

Discuss investment, financing, and dividend policy decisions, their interrelation, and impact on firm value.

Question

When determining the financial objectives of a company, it is necessary to take three types of policy decision into account: investment policy, financing policy, and dividend policy.

Required:

Discuss the nature of these THREE types of decisions, commenting on how they are inter-related and how they might affect the value of the firm (that is the present value of projected cash flows).

Answer

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Tags: Cash Flows, Cost of Capital, Debt Finance, Dividend Policy, Equity Finance, Financial Decisions, Financing Policy, Investment Policy, Project Viability, Shareholder Value
Level: Level 2

Topic: Introduction to Investment Appraisal

FM – L2 – Q8 – Introduction to financial management

Describe four key factors indicative of a successful organization.

Question

(A). One of the key expectations of the Finance Manager is to ensure the success of the organisation. Describe FOUR (4) key factors that are indicative of a successful organisation.

(B). The quarterly report of the treasury unit of Saruwa Limited contains a paragraph on government policy targets and progress towards achievement of the targets. The technical director has expressed disagreement about the time spent in discussing these policies as wasteful because the policies have no relevance to the business activities of the confectionery company.

Required:

As Head of Finance, you have been tasked to discuss SIX (6) points on government revenue mobilisation policies to agree or disagree with the Technical Director’s position.

(C). (i) Distinguish between fiscal policy and monetary policy.

(ii) Explain TWO adverse effects a contractionary fiscal policy could have on businesses.

Answer

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Tags: Business impact, Contractionary fiscal policy, Economic policy, Financial management
Level: Level 2

Topic: Economic and regulatory environment

FM – L2 – Q7 – Dividend policy

Discuss if share option schemes for directors/employees benefit shareholders of Sunlit Enterprises.

Question

Discuss whether share option schemes for either directors or employees generally, can benefit the interests of the shareholders in Sunlit Enterprises.

Answer

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Tags: Corporate Governance, Employee motivation, Managerial objectives, Share options, Shareholder wealth
Level: Level 2

Topic: Dividend policy

FM – L2 – Q6 – Economic and regulatory environment

Explain government measures to reduce a current account deficit and their impact on a multinational company.

Question

Explain how a government might try to reduce a large current account deficit on the balance of payments, and illustrate what impact such government action might have on a multinational company operating in the country concerned.

Answer

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Tags: Balance of Payments, Current Account Deficit, Fiscal Policy, Government Policy, Monetary Policy, Multinational Companies
Level: Level 2

Topic: Economic and regulatory environment

FM – L2 – Q5 – Economic and regulatory environment

Explain how government economic policies influence company decision-making.

Question

(A). Explain how a government might seek to influence decision-making by companies through its economic policies.

(B). Explain how a government’s ‘green policies’ might affect capital investment decisions by companies.

Answer

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Tags: Competition policy, Economies of scale, Financial strategy, Market dominance, Mergers and acquisitions
Level: Level 2

Topic: Economic and regulatory environment

FM – L2 – Q4 – Financial Objectives

Justify and criticize the assumption that a company's objective is to maximize shareholder wealth

Question

(A)

Justify and criticize the usual assumption made in financial management literature that the objective of a company is to maximize the wealth of the shareholders. (Do not consider how this wealth is to be measured.)

(B)

Outline other goals that companies claim to follow, and explain why these might be adopted in preference to the maximization of shareholder wealth.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Alternative objectives, Corporate goals, Management priorities, Shareholder wealth, Stakeholder interests
Level: Level 2

Topic: Introduction to financial management

Program (SQ): PROFESSIONAL PROGRAM

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MA – L2 – Q60 – Performance Analysis

Calculate the budgeted ROI for North Sector for the year to 31 December Year 7.

FM – L2 – Q12 – Economic and regulatory environment

Outline three unfair practices from GBA Bank's new AI-based credit assessment system.

FM – L2 – Q11 – Economic and regulatory environment

Explain five areas where government action impacts financial management decisions.

FM – L2 – Q10 – Economic and regulatory environment

Compare functions of IMF and World Bank, and explain IMF challenges in West Africa.

FM – L2 – Q9 – Financial Policy Decisions

Discuss investment, financing, and dividend policy decisions, their interrelation, and impact on firm value.

FM – L2 – Q8 – Introduction to financial management

Describe four key factors indicative of a successful organization.

FM – L2 – Q7 – Dividend policy

Discuss if share option schemes for directors/employees benefit shareholders of Sunlit Enterprises.

FM – L2 – Q6 – Economic and regulatory environment

Explain government measures to reduce a current account deficit and their impact on a multinational company.

FM – L2 – Q5 – Economic and regulatory environment

Explain how government economic policies influence company decision-making.

FM – L2 – Q4 – Financial Objectives

Justify and criticize the assumption that a company's objective is to maximize shareholder wealth

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Program (SQ): PROFESSIONAL PROGRAM

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Calculate the budgeted ROI for North Sector for the year to 31 December Year 7.

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Explain five areas where government action impacts financial management decisions.

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Compare functions of IMF and World Bank, and explain IMF challenges in West Africa.

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Discuss investment, financing, and dividend policy decisions, their interrelation, and impact on firm value.

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Describe four key factors indicative of a successful organization.

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Explain government measures to reduce a current account deficit and their impact on a multinational company.

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