QUESTION 1

Assume that your organisation is looking for a specialist to assist with decisions regarding future investment strategies. Critically discuss whether you would appoint an accountant or a financial manager. In your discussion, be sure to highlight the difference between an accountant and a financial manager, and the roles and responsibilities of both individuals.

QUESTION 2

How could a financial information system be beneficial to a business with respect to strategic financial management?

QUESTION 3

You have been instructed to assist your direct manager, who is extremely risk-averse, to make a decision between two investments, A and B. Both investments require an initial investment of R300 000, and they both have a most likely annual return of 15%.

Your manager has brainstormed three scenarios (pessimistic, most likely and optimistic), and the expected annual returns associated with each possible scenario. The estimated returns associated with the three possible scenarios for assets A and B are detailed in the table below.

Asset A Asset B
Initial investment R300 000 R300 000
Annual rate of return
- Pessimistic 10% 5%
- Most likely 15% 15%
- Optimistic 18% 20%

Explain to your manager, and demonstrate, how to conduct a scenario analysis. Based on this analysis, discuss which asset is likely to be chosen and why.

QUESTION 4

Obtain the latest financial statements of your organisation (or one you are familiar with) and comment on the firm's liquidity. Be sure to justify your arguments with sound analysis and interpretation of the financial statements. Show all calculations.

QUESTION 5

Research and explain the influence of credit management and debt collection on a firm's financial liquidity. Before attempting this question, revisit the technical requirement and assignment instructions. In this instance, remember that full referencing of all sources, including page numbers in in-text referencing, is essential.

QUESTION 6

An initial investment on machinery of R10 000 is expected to generate cash inflows of R3 000, R4 000, R5 000 and R6 000 at the end of the first, second, third and fourth year respectively. Assist your manager. Calculate and interpret the NPV of the investment if the discount rate is 15%. In addition, calculate and interpret the payback period of the investment.