Scribd
Upload
101 views2 pages

Tutorial 1 - Scope and Nature of Managerial Finance

The document discusses the responsibilities of a finance manager and the key components of a balance sheet/statement of financial position. It explains that a finance manager is responsible for forecasting and planning, determining optimal sales growth rates, managing risk, and interacting with other executives. It also notes that a balance sheet displays a company's assets, liabilities, and equity on a given date, with the major components being assets, liabilities, and net worth or equity.

Uploaded by

Shi Man
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
101 views2 pages

Tutorial 1 - Scope and Nature of Managerial Finance

The document discusses the responsibilities of a finance manager and the key components of a balance sheet/statement of financial position. It explains that a finance manager is responsible for forecasting and planning, determining optimal sales growth rates, managing risk, and interacting with other executives. It also notes that a balance sheet displays a company's assets, liabilities, and equity on a given date, with the major components being assets, liabilities, and net worth or equity.

Uploaded by

Shi Man
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

TUTORIAL 1: SCOPE AND NATURE OF MANAGERIAL FINANCE

Question 1 (Alex Chua Zhi Hong)

Discuss the responsibilities of a finance manager.

Firstly, finance manager must know how to forecasting and planning to shape the firm`s future
position. Secondly, finance manager also needs to determine the optimal rate of sales growth and
interact with other executives to ensure that the firm is operated as efficiently as possible. Next,
they require to manage risk to the minimum probability in order to better manage funds and
currencies.

Question 2 (Chua Ing Ing)

Using a statement of financial position/balance sheet, describe the major decisions of financial
management.

Question 3 (Chew Jia Jun)


In microeconomics, profit maximization is always used as a goal of the firm. However, in
finance, this is not the case. Instead, finance considers “maximization of shareholders’ wealth” as
an appropriate goal of the firm. Discuss the rationale behind this.

Profit maximization is just referring to how much dollar profit the company
makes and it ignores the timing of returns, magnitude of returns and risk.
Instead, finance is focus on maximizing shareholder's wealth which means
the value of a company (i.e., value of the stock). It is a long-term approach
which considers the timing of returns, magnitude of returns, and risk. Profit
should not be the only objective of the company, because stock/share price is
always the best indicator of shareholders' wealth.

Question 4 (Cynthia Ho)

Why is the “Statement of Financial Position” also called a Balance Sheet?

The balance sheet / Statement of Financial Position (SOFP) is a formal document that follows a
standard accounting format showing the same categories of assets and liabilities regardless of the
size or nature of the business. Besides that, the balance sheet is called a statement of financial
position (SOFP) because it shows financial stability, liquidity and performance of the business. It
is one of the main financial statements. The statement of financial position reports an entity's
assets, liabilities, and the difference in their totals as of the final moment of an accounting period.
But, in Malaysia they no longer use balance sheet. They use Statement of Financial Position
(SOFP) to present in the annual report. This is because SOFP is more representative of what it is
presented, which is financial position such as company asset, liability and equity.

Question 5 (Danzel Goay Si Yuan)

What are the main components of the Balance Sheet?

The Balance Sheet represents one day in the life of a business. It shows how much of a business
is owned (assets) and how much it owes (liabilities) on that one day. In other words it is a
snapshot of a specific day in the life of a business. The difference between what is owned and
what is owed on that day is the business’s net worth or equity. A business Balance Sheet has 3
components: assets, liabilities, and net worth or equity. The Balance Sheet is like a scale. Assets
and liabilities (business debts) are by themselves normally out of balance until you add the
business’s net worth. So assets equals liabilities plus equity. On the other hand , the assets and
liabilities have different types like current assets which are short term assets that are easily
convertible for cash within the period of a year. For example : Prepaid Expenses.

You might also like