Corporate Finance: Dividends and Strategy

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What is financial management primarily concerned with?

Minimizing costs

Optimizing investment opportunities

Maximizing profits

Managing the finances of an organization to achieve its financial objectives (correct)

What is the primary goal of financing decisions in financial management?

Estimating future cash flows from each investment opportunity

Identifying the best investment opportunities

Determining the optimal mix of capital components (correct)

Paying out dividends to shareholders

What is the primary purpose of a corporate strategy?

To specify a course of action to achieve a specific objective (correct)

To increase market share

To maximize profits in the short term

To improve customer satisfaction

Which of the following is a non-financial objective of a firm?

Customer satisfaction Signup and view all the answers

What is a critical issue in the dividend decision function of financial management?

Determining how much dividend per share to pay to shareholders Signup and view all the answers

What is the purpose of investment decisions in financial management?

To identify the appropriate investment opportunities and estimate future benefits Signup and view all the answers

What is the primary difference between profit maximization and shareholder wealth maximization?

Measure of financial performance Signup and view all the answers

What is the primary function of a finance manager in the context of financial management?

To perform all functions of financial management, including financing, investment, and dividend decisions Signup and view all the answers

What is the primary purpose of paying dividends?

To distribute profits to shareholders Signup and view all the answers

Which of the following is a financial objective of a firm?

Return on capital employed Signup and view all the answers

What is the ultimate goal of financial management in an organization?

To achieve the financial objectives of the organization Signup and view all the answers

What is the primary benefit of a corporate strategy?

Achievement of specific objectives Signup and view all the answers

What is a key assumption of the profit maximization objective?

The firm operates at full capacity in a competitive market Signup and view all the answers

What is the formula for total shareholder return?

(P1-P0+D1)/P0 Signup and view all the answers

What is a limitation of the profit maximization objective?

It ignores the time value of money Signup and view all the answers

What is the purpose of the earnings per share (EPS) growth objective?

To compare the performance of a company over a number of years Signup and view all the answers

What is shareholder wealth maximization?

The number of shares held by shareholders multiplied by the share price of the company Signup and view all the answers

What is the advantage of shareholder wealth maximization objective?

It considers the welfare of all stakeholders and the time value of money Signup and view all the answers