3 BBPW3103JAN09ASGMT RR QUESTION 2 a In the effort to determine the financial

3 bbpw3103jan09asgmt rr question 2 a in the effort to

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BBPW3103/JAN09/ASGMT-RR QUESTION 2 a) In the effort to determine the financial objectives of a company, it is necessary to take three types of policy decision into account – investment policy, financing policy and dividend policy. Discuss the nature of these policy decisions by commenting on how they are interrelated and how they affect the value of the firm. (9) b) Assume that you are the finance director of a public listed company on Bursa Malaysia. During a management meeting, you have proposed to the management to raise new debt to finance the business expansion. However, one of the non- executive directors is not keen on raising new external finance. He suggested that the company should utilise its retained profits to finance the expansion including acquiring of new land and buildings. In his view, this approach will save all the issuing costs and reduce the uncertainty involved in raising new external finance. At the same time, the company is also reviewing its corporate plan. Currently, the company is focusing on maximising its shareholders’ wealth as its major goal. However, the managing director of the company thinks this single goal is inappropriate and requested his co-directors to give greater emphasis to the following: cash-flow generation; and profitability as measured by profits after tax and return on investment. Based on the above information, you are required to answer the following questions: i) critically evaluate the argument that maximisation of shareholders’ wealths should be the only objective of a company; and (5) ii) discuss the advantages and disadvantages of the directors’ views on the alternative goals. (5) [Total: 35 marks] 4
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BBPW3103/JAN09/ASGMT-RR SOALAN TUGASAN ARAHAN: Tugasan ini mengandungi DUA soalan. Jawab SEMUA. SOALAN 1 Penyata pendapatan Perdana Berhad bagi tahun berakhir 31 Disember 2008 dan lembaran imbangan pada 31 Disember 2007 dan 2008 adalah seperti berikut: Perdana Berhad Penyata Pendapatan bagi tahun berakhir 31 Disember 2008 RM'000 Jualan 290,000 Kos barang dijual (215,000) Untung kasar 75,000 Belanja operasi (nota 1) (62,000) Untung operasi 13,000 Faedah belum bayar (nota 2) (3,000) Untung sebelum cukai 10,000 Cukai (2,600) Untung selepas cukai 7,400 Dividen dibayar (3,500) Untung tertahan 3,900_ Perdana Berhad Lembaran Imbangan pada 31 Disember 2007 dan 2008 2007 2008 5
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BBPW3103/JAN09/ASGMT-RR RM'000 RM'000 RM'000 RM'000 Aset tetap Aset tetap (nota 3) 80,00 0 85,00 0 Aset Semasa Stok dan penghutang 119,800 122,100 Tunai di bank 9,200 16,600 129,000 138,700 Liabiliti semasa Pemiutang (80,000) (82,500) Cukai (1,000) (1,300) (81,000) (83,800) Aset semasa bersih 48,000 54,900
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