Question

(INTRODUCTION TO FINANCIAL MANAGEMENT)

Question 1.

You are a manager who work at finance department of ANZ Corporation in Malaysia. You are interested to analyse the core principles of finance that influence your company’s financial figures. Explain and provide example of any FIVE (5) principles of finance that give significant impacts to your decision making process in order to achieve the desired financial performance for year 2020. (25marks)

Answer 1

Five principle of finance that will significantly impact my decision making process for desired result are as follows-

A. Diversification of of various projects in order to maintain better portfolio and better risk because diversification will eliminate all the unsystematic risk so that it will be helpful in order to maximize the rate of return.

B. There should be an important focus upon taxation because taxation will be eating up a lot of profits and taxation will also help in order to maximize the rate of return by proper management and taxation will also help through to maximizing the overall rate of return.

C. Risk management is one of the most important factors related to the financial management and proactive risk management will help the financial managers in order to manage the various kinds of risk with can arise into the future so it will enhance their opportunity of making a higher rate of return.

D. There should always be a focus upon minimization of the risk and maximization of the return so it will help in exceeding the cost of capital so that it will also help help in maximization of the organisational value.

E. There should be a focus upon time value of money because time value of money concept is one of the most important concept which will enhance the probability of selection of better projects and maximization of the rate of return in future through impact of compounding

These are the type of financial principles I would be embedding into the overall financial management is here in order to maximise my rate of return.