A Typical 'Public' Company Has Many Types of Shareholders, from Individuals

question 68

Multiple Choice

A typical 'public' company has many types of shareholders, from individuals holding a few shares, to large institutions that hold very large numbers of shares. How does a financial manager ensure that the priorities and concerns of such disparate shareholders are met?

• A) The financial manager should seek to make investments that do not harm the interests of the shareholders.
• B) The financial manager should consider the interests and concerns of large shareholders a priority, so the needs of those who hold a controlling interest in the company are met.
• C) The decisions taken by the financial manager should be solely influenced by the benefit to the company since, by maximising its fitness, he or she will also maximise the benefits of that company to the shareholders.
• D) In general, all shareholders will agree that they are better off if the financial manager works to maximise the value of their investment.

Calculate and interpret the cash flow on total assets ratio.

Differentiate between adjustments required for the indirect method of preparing the statement of cash flows.

Appreciate the significance of the statement of cash flows in financial analysis and decision-making.

Recognize the impact of specific transactions on cash flows.

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