1. Overview of financial planning Aa Aa Bohemian Manufacturing Company\'s board
ID: 2620487 • Letter: 1
Question
1. Overview of financial planning Aa Aa Bohemian Manufacturing Company's board of directors has stated that "The firm's goal is to maximize shareholder wealth over time." This statement most likely represents the firm's The market has a tendency to value focused firms more highly than diversified ones, particularly when firms have diversified their operations into areas about which management knows little in the pursuit of sales growth. Having a clearly defined and reasonable could get the firm into trouble in the long run. can help a firm avoid expanding into areas that Bohemian Manufacturing Company has told its operating managers that it wants to attain a 40% market share, a 15% ROE, and an 8% earnings growth rate. This would be an example of a Which of the following statements about the financial planning process are true? Check all that apply Once the forecasted financial statements are completed, the firm must determine how much capital it will need to support these plans. New computer software has made it ea plan, and that has reduced the need for analysts and "middle managers" who previously developed maintained, and explained the financial plan. sier for top-level managers to monitor the workings of the financial hould use a performance-based management compensation system that is based on a manager's ability to achieve short-run successExplanation / Answer
Ans.1: This statement represents the firm's valuation because when the share price of a firm increases, its market capitalization (Market Cap= No. of shares x price per share) increases which in turn causes an increase in the net worth of the shareholders.
Ans.2: Having a clearly defined and reasonable financial plan can help a firm avoid expanding into areas that could get the firm into trouble in the long run because a business plan for expansion is a detailed description and analysis of venturing into a new business idea.
Ans.3: This is an example of your financial action plan since the goals have been defined in quantitative terms and for a shorter time period say a year.
Ans.4: The First statement is true because the financial feasibility of a plan is a must once all projections are done with.
The second statement is also true because these softwares provide real-time information to their client's about the progress.
The third statement is not true because financial planning looks into long-term goals and hence managers should be able to fulfill them.
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