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Questions and Answers
What is finance defined as?
The science and art of managing money.
What is the primary goal of Financial Management?
To maximize the value of shares of stocks.
Who elects the Board of Directors?
The shareholders.
Which of the following is NOT a responsibility of the Board of Directors?
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What role does the president (CEO) play in a corporation?
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Which responsibility belongs to the VP for Production?
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What are the primary responsibilities of the VP for Administration?
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Study Notes
Finance and Financial Management
- Finance is managing money
- Financial management is making decisions to maximize shareholder wealth value
- Decisions influence the market's perception and share price
- Managers make decisions to increase shareholder wealth
Company Structure and Decision Making
- The company organizational structure focuses on a structure of responsibility with each level working to serve the interest of those above
- In a corporation, the shareholders elect the board of directors
- Each share represents one voting right.
- The board of directors is the highest policy-making body who ensures the company is serving the best interest of the stockholders
- The board of directors are responsible for:
- Setting policies on investments, capital structure, and dividend policies
- Approving the company’s strategies, goals, and budgets
- Appointing and removing members of the top management, including the president
- Determining top management’s compensation
- Approving the information and other disclosures reported in the financial statements
President (Chief Executive Officer)
- The President is responsible for:
- Approving the information and other disclosures reported in the financial statements
- Overseeing the company's operations and ensuring that the strategies as approved by the board are implemented as planned
- Performing all areas of management: planning, organizing, staffing, directing, and controlling
- Representing the company in professional, social, and civic activities
VP for Marketing
- The VP for Marketing is responsible for:
- Formulating marketing strategies and plans
- Directing and coordinating company sales.
- Performing market and competitor analysis
- Analyzing and evaluating the effectiveness and cost of marketing methods applied
- Conducting or directing research to identify new marketing opportunities
- Promoting good relationships with customers and distributors
VP for Production
- The VP for Production is responsible for:
- Ensuring production meets customer demands
- Identifying production technology/process that minimizes production cost and makes the company cost competitive
- Coming up with a production plan that maximizes the utilization of the company’s production facilities
- Identifying adequate and cheap raw material suppliers
VP for Administration
- The VP for Administration is responsible for:
- Coordinating the functions of administration, finance, and marketing departments.
- Assisting other departments in hiring employees.
- Assisting in payroll preparation, payment of vendors, and collection of receivables.
- Determining the location and the maximum office space needed by the company
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Description
Test your understanding of financial management concepts and the organizational structure of companies. This quiz covers critical aspects of decision-making to maximize shareholder value and the roles of the board of directors. Dive deep into finance and management principles!
