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FIN203 Financial Management Assessment Answers


FIN203 Assessment Answers

Financial management can be regarded as the organizing, planning, managing and controlling the overall financial activities like the utilization and procurement of the funds of a firm. It indicates application of the general management principles to the financial resources of the firm. FIN203 assessment answers Thus it is mainly concerned with the procurement, apportionment, and controlling of the financial resources of the concern. The objectives of this financial management are stated below:

  • To assure sufficient returns to all the shareholders that will rely on market price of company’s share, earning capacity, and the expectations of each shareholder.
  • To assure sufficient and regular supply of the required funds to the company.
  • To plan the sound and viable capital structure. There must be fair and sound composition of the capital in order to maintain the balance between the equity and debt capital
  • To assure optimum utilizationof the overall available funds. Once these funds are procures, they must be used in optimum possible manner at least cost.

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Functions of Financial Management

  • Approximation of the capital needs: The finance manager has to make the approximation in relation to the capital needs of the firm. This will generally rely on the expected profits and costs and future policies and programmersof the firm. The approximations have to be typically made in an effective way which enhances earning capacity of the firm FIN203 assignments.
  • Ascertainment of capital composition:Once the approximations have been made, the overall capital structure needs to be decided. This includes long run and short run equity analysis. This will rely on the overall proportion of the equity capital a firm is having and the extra funds which needs to be raised from the outside parties.
  • Selection of the sources of funds: The firm has various choices for the additional funds which needs to be procured and some of them listed below:
  • Public deposits which can be drawn in the form of bonds
  • Loans which can be taken from financial institutions and banks
  • Issue of the debenture and shares

The selection of the factor will be on the basis of the relative demerits and merits of every period and source of financing.

  • Disposal of the surplus: The decision related to net profit needs to be made by a finance manager. This can be generally done in 2 ways:
  • Retained profits: The overall volume needs to be decided which will be based on the expansion, diversification, and innovation plans of the firm
  • Declaration of Dividend: It incorporates recognizing the overall dividend rate and such other benefits such as bonus.
  • Investment of the funds: A finance manager needs to decide regarding the allocation of the funds into the profitable and effective ventures so that there is a proper safety on investment and systematic returns is possible.
  • Financial controls: A finance manager has not only to procure, plan and use the available funds but he also needs to exercise the control over the finances. fin203solutions This can be generally done via various techniques such as profit control, financial forecasting, ratio analysis and so on.
  • Administration of the cash: The finance manager has to make the required decisions in relation to the cash administration. The cash is needed for several purposes such as payment of salaries and wages, purchase of the raw materials, payment to the creditors, and payment of water and electricity bills, maintenance of the sufficient stock, meeting the current liabilities and so on.

FIN203203 of Financial Planning 

Financial planning can be defined as the procedure of predicting the capital needed and knowing its overall competition. It is generally the procedure of framing the financial policies with regards to the investment, procurement and management of overall funds of the firm. The major objectives of this financial planning are given below:

  • Understanding capital needs: This will generally rely on the factors such as the cost of the fixed and current assets, long run planning and the promotional expenditures. Capital needs have to be observed with both aspects namely long run and short run needs.
  • Understanding capital structure: The capital structure of the firm is generally the composition of the capital that is the relative proportion and type of capital needed in the business.FIN203 task answers This incorporates decisions of the debt-equity ratio in both short run and long run.
  • Outlining financial policies in relation to the lending, cash control, borrowings and so on.

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Working Capital Management of FIN203 Assessments

Working capital management can be regarded as the business strategy fabricated to assure that the firm carries out its operation effectively by observing and utilizing its current liabilities and assets to their most efficient use. The effectiveness of the working capital management can be generally quantified using the ratio analysis. Working capital management generally aims at more effective utilization of the firm’s resources by observing and optimizing the utilization of the current liabilities and assets. The main purpose is to sustain adequate cash flow to meet its overall short run debt obligations, short run operating expense and maximize the profitability.


Working capital management is the key to CCC (Cash conversion cycle) or the total time that the company utilizes to transform the working capital into the usable cash. Assuring that a firm has adequate resources for its regular activities means preserving the existence of the firm and assuring it can continue operating as the going concern. Limited accessibility to the short run financing, uncontrolled commercial credit policies, and scarce availability of the cash can result in the requirement of liquidation, asset sales and restructuring of the firm. The ratios which are crucial in the working capital management are working capital ratio, inventory turnover ratio and collection ratio.


However, working capital requirements are not the same for each firm. The factors which can generally influence the working capital requirements are exogenous or endogenous. Exogenous factors incorporates the availability and access of the banking services, kind of industry and goods or services sold, the level of interest rates, strategy, number and size of its competitors and the macroeconomic conditions. Endogenous factors incorporates strategy, size and structure of the firm.

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