• Financial management is the managerial activity which is concerned with planning and controlling of the firm's financial resources.
It is concerned with acquiring financing and managing assets to accomplish the overall goal of a business enterprise mainly maximization of shareholders wealth.
• In today's world where positive cash flow is more important than book profit, financial management can also be defined as planning for the future of a business enterprise to ensure a positive cash flow.
• Some experts also refer to financial management as the science of money management. Financial management compromises of forecasting, planning, organizing, directing, coordinating and controlling of all activities relating to acquisition and application of the financial resources of an undertaking in keeping with its financial objectives.
Kavungya answered the question on April 13, 2021 at 06:27
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Explain how to calculate WACC in financial management
(Solved)
Explain how to calculate WACC in financial management
Date posted:
June 27, 2019
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Answers (1)
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What are the benefits and challenges with the implantation of a Material requirement planning (MRP) system?
(Solved)
What are the benefits and challenges with the implantation of a Material requirement planning (MRP) system?
Date posted:
June 1, 2019
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List the importance of management in an organization
(Solved)
List the importance of management in an organization.
Date posted:
March 7, 2019
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Answers (1)
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List and explain the 14 principles of management
(Solved)
List and explain the 14 principles of management
Date posted:
March 5, 2019
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Answers (1)
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Define management theory and list the advantages of studying it
(Solved)
Define management theory and list the advantages of studying it.
Date posted:
March 5, 2019
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Answers (1)
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Identify 6 factors a firm must consider when designing dividend policies.
(Solved)
Identify 6 factors a firm must consider when designing dividend policies.
Date posted:
February 12, 2019
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Answers (1)
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State the alternative dividend policies a firm may adopt.
(Solved)
State the alternative dividend policies a firm may adopt.
Date posted:
February 12, 2019
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Answers (1)
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The following six have been submitted for inclusion in 1998 capital expenditure budget for
Limuru Ltd.
(Solved)
The following six have been submitted for inclusion in 1998 capital expenditure budget for
Limuru Ltd.
Required:
(a) Rates of return (to the nearest half percent) for projects B, C and D and a ranking of all
projects in descending order.
b) Compute the payback reciprocal for projects B and C.
(c) Compute the N.P.V of each project using 16% as discount rate and rank all projects
Date posted:
February 12, 2019
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Answers (1)
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Identify the various methods of issuing new ordinary shares to shareholders.
(Solved)
Identify the various methods of issuing new ordinary shares to shareholders.
Date posted:
February 12, 2019
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Answers (1)
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Why does ordinary share capital have a high cost relative to debt capital?
(Solved)
Why does ordinary share capital have a high cost relative to debt capital?
Date posted:
February 12, 2019
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Answers (1)
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Using illustrative examples, explain the payback period and accounting rate of return methods of
projects appraisal and explain the advantages and disadvantages of each method.
(Solved)
Using illustrative examples, explain the payback period and accounting rate of return methods of
projects appraisal and explain the advantages and disadvantages of each method.
Date posted:
February 12, 2019
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Answers (1)
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What practical problems are faced by finance managers in capital budgeting decisions.
(Solved)
What practical problems are faced by finance managers in capital budgeting decisions.
Date posted:
February 12, 2019
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Answers (1)
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What are the features of a sound appraisal technique?
(Solved)
What are the features of a sound appraisal technique?
Date posted:
February 12, 2019
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Answers (1)
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The Altman formula for prediction of bankruptcy is given as follows:
(Solved)
The Altman formula for prediction of bankruptcy is given as follows:
Date posted:
February 12, 2019
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Answers (1)
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The following information is provided in respect to the affairs of Pote Limited which prepares
its account on the calendar year basis.
(Solved)
The following information is provided in respect to the affairs of Pote Limited which prepares
its account on the calendar year basis.
Required:
a) Calculate the rate of stock turnover expressed:
i) as a ratio;
ii)in days for each of the years 1994 and 1995.
b) Calculate the rate of collection of debtors, in days, for each of the years 1994 and 1995.
(3 marks)
c) Calculate the rate of payment to creditors, in days, for each year 1994 and 1995.
(3 marks)
d) Show the cash operating cycle for each year.
e) Comment on the results.
Date posted:
February 12, 2019
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Answers (1)
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Mr. Castro uses a 20% hatch system of timing when to invest in a stock market. In a
given year, the top of a given share...
(Solved)
Mr. Castro uses a 20% hatch system of timing when to invest in a stock market. In a
given year, the top of a given share was Sh.150 and its bottom was Sh.90. During the
year, the company paid an interim DPS of Sh.1.50 and a final DPS of Sh.4.50.
Determine the % return on investment.
Date posted:
February 12, 2019
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Answers (1)
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With reference to capital market, define the following terms:
i) Contango operation
ii) Backwardation
iii) Stags
iv) Role of investment banker
(Solved)
With reference to capital market, define the following terms:
i) Contango operation
ii) Backwardation
iii) Stags
iv) Role of investment banker
Date posted:
February 12, 2019
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Answers (1)
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What are the advantages of having a farmers' bank compared with an ordinary
commercial bank in the provision of services to farmers
(Solved)
What are the advantages of having a farmers' bank compared with an ordinary
commercial bank in the provision of services to farmers
Date posted:
February 12, 2019
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Answers (1)
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Why do different sources of finance have different costs?
(Solved)
Why do different sources of finance have different costs?
Date posted:
February 12, 2019
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Answers (1)
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The Kitale Maize Mills is contemplating the purchase of a new high-speed grinder to replace an
existing one. The existing grinder was purchased two years ago...
(Solved)
The Kitale Maize Mills is contemplating the purchase of a new high-speed grinder to replace an
existing one. The existing grinder was purchased two years ago at an installed cost of Sh.300,000.
The grinder was estimated to have an economic life of 5 years but a critical analysis of its
performance now shows it is usable for the next five years with no resale value.
The new grinder would cost Sh.525,000 and require Sh.25,000 in installation costs. It has a five
year usable life. The existing grinder can currently be sold for Sh.350,000 without incurring any
removal costs. To support the increased business resulting from purchase of the new grinder,
accounts receivable would increase by Sh.200,000, inventories by Sh.150,000 and trade creditors
by Sh.290,000. At the end of 5 years the new grinder would be sold to net Sh.145,000 after
removal costs and before taxes. The company provides for 40% taxes on ordinary income. The
estimated profit before depreciation and taxes over the five years for both machines are given as
follows:
The company uses straight line method of depreciation for both machines.
Required:
a) Calculate the initial investment associated with the replacement of the existing grinder
with the new one. Show your full workings.
b) Determine the incremental operating cash flows associated with the proposed grinder
replacement.
c) Calculate the terminal cash flow expected from the proposed grinder replacement.
Date posted:
February 12, 2019
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Answers (1)