- 5 Marks
FM – Nov 2014 – L3 – SC – Q5b – Financial Risk Management
Examine financial objectives, strategic changes, and risks during privatization of a state-owned enterprise.
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- 10 Marks
FM – Nov 2014 – L3 – SC – Q5a – Corporate Restructuring
Discuss financial objectives and changes in strategic focus during privatization of a state-owned enterprise.
Question
Assume that you are a Finance Manager in a state-owned enterprise which is about to have its majority ownership transferred to the private sector through listing on the Nigerian Stock Exchange.
You are required to examine the financial objectives and the changes in emphasis that are associated with strategic and operational decisions in the above scenario. (10 Marks)
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- 9 Marks
FM – May 2023 – L3 – Q5a – Strategic Performance Measurement
Evaluate TAXIM Plc’s financial performance in achieving profit growth, EPS growth, and shareholder return objectives.
Question
The following financial information relates to TAXIM Plc, a listed company:
| Year | 2021 | 2020 | 2019 |
|---|---|---|---|
| Profit before interest and tax (₦m) | 18.3 | 17.7 | 17.1 |
| Profit after tax (₦m) | 12.8 | 12.4 | 12.0 |
| Dividends (₦m) | 5.1 | 5.1 | 4.8 |
| Equity market value (₦m) | 56.4 | 55.2 | 54.0 |
TAXIM Plc has 12 million ordinary shares in issue and has not issued any new shares in the period under review. The company is financed entirely by equity.
The annual report of TAXIM Plc states that the company has three financial objectives:
- Objective 1: To achieve growth in profit before interest and tax of 4% per year.
- Objective 2: To achieve growth in earnings per share of 3.5% per year.
- Objective 3: To achieve total shareholder return of 5% per year.
TAXIM Plc has a cost of equity of 12% per year.
Required:
Analyse and discuss the extent to which TAXIM Plc has achieved each of its stated objectives. (9 Marks)
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- 15 Marks
FM – Nov 2021 – L3 – Q5 – Corporate Governance and Stakeholder Management
Analyze criteria for setting objectives in public and private sectors, addressing stakeholder needs and potential consequences of unmet objectives.
Question
a. Ibile is a local government entity financed approximately equally by central government funding and local taxation. The central government funding allocation is primarily determined on a per capita basis, adjusted for the level of deprivation or special needs within Ibile’s region. A small portion of Ibile’s revenue comes from the private sector, such as renting out City Hall for private events.
Ibile’s Main Objectives:
- Enhance the region’s economic prosperity and attractiveness as a place to live and work.
- Provide service excellence in health and education for the local community.
b. Layo is a large, publicly listed entity with extensive commercial and geographical interests. It has historically established its headquarters in Ibile’s region, which is unusual for a company of its size, as such entities typically base their HQ in a capital or major city.
Layo’s Main Objectives:
- Financial: Achieve an average annual increase of 10% in shareholder wealth.
- Non-Financial: Maintain favorable treatment of various stakeholders, including local communities where it operates.
Layo’s total net assets are valued at ₦1.5 billion with a gearing ratio of 45% (debt to debt plus equity), consistent with industry norms. The company is currently exploring options to raise significant capital to fund an acquisition.
Required:
Discuss the criteria that each entity (Ibile and Layo) must consider when setting objectives, taking into account the needs of their main stakeholder groups. Reference the consequences each might face if it fails to achieve its stated objectives.
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- 15 Marks
FM – Nov 2017 – L3 – Q5 – Corporate Governance and Financial Strategy
Identify stakeholder financial objectives and discuss methods to incentivize directors to maximize shareholder wealth.
Question
Private sector companies have multiple stakeholders who are likely to have divergent interests.
Required:
(a) Identify FIVE stakeholder groups and discuss briefly their financial objectives.
(10 Marks)
(b) Explain ways in which companies’ directors can be encouraged to achieve the objective of maximisation of shareholders’ wealth.
(5 Marks)
(Total 15 Marks)
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- 6 Marks
BMF – Nov 2019 – L1 – SB – Q2b – Investment Decisions
Explain limitations of financial objectives and ways to assess performance.
Question
(b) THREE commonly-used financial objectives of a firm are to maximise shareholders’ wealth, profitability, and growth in earnings per share. However, these three objectives have some limitations hence the saying ‘no financial target on its own is ideal’.
(i) Explain the limitations of these THREE financial objectives of the firm. (6 Marks)
(ii) State and explain THREE ways by which financial performance of a firm might be assessed. (6 Marks)
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- Tags: Financial objectives, Growth in Earnings, Performance Assessment, Profitability
- Level: Level 1
- Topic: Investment Decisions
- Series: NOV 2019
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- 10 Marks
FM – Nov 2017 – L2 – Q1a – Introduction to Financial Management
Explain four non-financial objectives of private companies and their effect on financial objectives.
Question
Directors usually want to focus on factual matters and concrete actions. They deal with rules, regulations, and compliance standards to ensure adherence to the law. They mostly measure company’s performance in financial terms with secondary consideration of other metrics.
i) Briefly explain and identify FOUR examples of non-financial objectives of private companies. (6 marks)
ii) Discuss and identify examples of the effect of these non-financial objectives on the achievement of the financial objectives of companies. (4 marks)
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- Tags: Financial objectives, Non-financial objectives, Private companies
- Level: Level 2
- Topic: Introduction to Financial Management
- Series: NOV 2017
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- 5 Marks
FM – Nov 2014 – L3 – SC – Q5b – Financial Risk Management
Examine financial objectives, strategic changes, and risks during privatization of a state-owned enterprise.
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- 10 Marks
FM – Nov 2014 – L3 – SC – Q5a – Corporate Restructuring
Discuss financial objectives and changes in strategic focus during privatization of a state-owned enterprise.
Question
Assume that you are a Finance Manager in a state-owned enterprise which is about to have its majority ownership transferred to the private sector through listing on the Nigerian Stock Exchange.
You are required to examine the financial objectives and the changes in emphasis that are associated with strategic and operational decisions in the above scenario. (10 Marks)
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Report an error
- 9 Marks
FM – May 2023 – L3 – Q5a – Strategic Performance Measurement
Evaluate TAXIM Plc’s financial performance in achieving profit growth, EPS growth, and shareholder return objectives.
Question
The following financial information relates to TAXIM Plc, a listed company:
| Year | 2021 | 2020 | 2019 |
|---|---|---|---|
| Profit before interest and tax (₦m) | 18.3 | 17.7 | 17.1 |
| Profit after tax (₦m) | 12.8 | 12.4 | 12.0 |
| Dividends (₦m) | 5.1 | 5.1 | 4.8 |
| Equity market value (₦m) | 56.4 | 55.2 | 54.0 |
TAXIM Plc has 12 million ordinary shares in issue and has not issued any new shares in the period under review. The company is financed entirely by equity.
The annual report of TAXIM Plc states that the company has three financial objectives:
- Objective 1: To achieve growth in profit before interest and tax of 4% per year.
- Objective 2: To achieve growth in earnings per share of 3.5% per year.
- Objective 3: To achieve total shareholder return of 5% per year.
TAXIM Plc has a cost of equity of 12% per year.
Required:
Analyse and discuss the extent to which TAXIM Plc has achieved each of its stated objectives. (9 Marks)
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- 15 Marks
FM – Nov 2021 – L3 – Q5 – Corporate Governance and Stakeholder Management
Analyze criteria for setting objectives in public and private sectors, addressing stakeholder needs and potential consequences of unmet objectives.
Question
a. Ibile is a local government entity financed approximately equally by central government funding and local taxation. The central government funding allocation is primarily determined on a per capita basis, adjusted for the level of deprivation or special needs within Ibile’s region. A small portion of Ibile’s revenue comes from the private sector, such as renting out City Hall for private events.
Ibile’s Main Objectives:
- Enhance the region’s economic prosperity and attractiveness as a place to live and work.
- Provide service excellence in health and education for the local community.
b. Layo is a large, publicly listed entity with extensive commercial and geographical interests. It has historically established its headquarters in Ibile’s region, which is unusual for a company of its size, as such entities typically base their HQ in a capital or major city.
Layo’s Main Objectives:
- Financial: Achieve an average annual increase of 10% in shareholder wealth.
- Non-Financial: Maintain favorable treatment of various stakeholders, including local communities where it operates.
Layo’s total net assets are valued at ₦1.5 billion with a gearing ratio of 45% (debt to debt plus equity), consistent with industry norms. The company is currently exploring options to raise significant capital to fund an acquisition.
Required:
Discuss the criteria that each entity (Ibile and Layo) must consider when setting objectives, taking into account the needs of their main stakeholder groups. Reference the consequences each might face if it fails to achieve its stated objectives.
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- 15 Marks
FM – Nov 2017 – L3 – Q5 – Corporate Governance and Financial Strategy
Identify stakeholder financial objectives and discuss methods to incentivize directors to maximize shareholder wealth.
Question
Private sector companies have multiple stakeholders who are likely to have divergent interests.
Required:
(a) Identify FIVE stakeholder groups and discuss briefly their financial objectives.
(10 Marks)
(b) Explain ways in which companies’ directors can be encouraged to achieve the objective of maximisation of shareholders’ wealth.
(5 Marks)
(Total 15 Marks)
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- 6 Marks
BMF – Nov 2019 – L1 – SB – Q2b – Investment Decisions
Explain limitations of financial objectives and ways to assess performance.
Question
(b) THREE commonly-used financial objectives of a firm are to maximise shareholders’ wealth, profitability, and growth in earnings per share. However, these three objectives have some limitations hence the saying ‘no financial target on its own is ideal’.
(i) Explain the limitations of these THREE financial objectives of the firm. (6 Marks)
(ii) State and explain THREE ways by which financial performance of a firm might be assessed. (6 Marks)
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- Tags: Financial objectives, Growth in Earnings, Performance Assessment, Profitability
- Level: Level 1
- Topic: Investment Decisions
- Series: NOV 2019
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- 10 Marks
FM – Nov 2017 – L2 – Q1a – Introduction to Financial Management
Explain four non-financial objectives of private companies and their effect on financial objectives.
Question
Directors usually want to focus on factual matters and concrete actions. They deal with rules, regulations, and compliance standards to ensure adherence to the law. They mostly measure company’s performance in financial terms with secondary consideration of other metrics.
i) Briefly explain and identify FOUR examples of non-financial objectives of private companies. (6 marks)
ii) Discuss and identify examples of the effect of these non-financial objectives on the achievement of the financial objectives of companies. (4 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Financial objectives, Non-financial objectives, Private companies
- Level: Level 2
- Topic: Introduction to Financial Management
- Series: NOV 2017
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