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    performance in proper financial management

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    I am a independent financial advisor who have had discussions with the board of directors of the company XYZ plc. In doing so, I have identified the following key areas which need to be addressed.


    In a firm XYZ plc. there is little understanding of the role of a financial management with other directors, and I feel that this limits their ability to make sound decisions regarding shareholder wealth maximization,

    No strategy for source of capital and little understanding of managing cost of capital,

    And also large projects are invested without proper investment appraisal.

    How can we report to the board of directors key principles and concepts in the above areas and discuss techniques by which the company may improve performance?

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    Solution Preview

    Role of financial management:

    In XYZ plc this relates to financial decision making. The strategy for financing investments must be formulated. Moreover, the decisions regarding the distribution of profit or retention of profits should be decided in a systematic manner. Further, financial control is essential to ensure that the interests of shareholders are protected, the assets of the business need to be secured and the assets must be used profitability. Finally, financial management ensures that that there is proper financial planning. In other words funds are available for making payments and funds do not remain idle and non productive.

    Its role in shareholder wealth maximization:
    Financial management by exerting its role in decision making, protecting the assets and exerting financial control ...

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