Question 1. What Is The Financial Management Reform?
The Financial Management Reform is the new coverage framework that have been adopted by the Fiji Government to enhance performance and responsibility.
Question 2. Why Was The Fmr Introduced?
The framework has been added following public difficulty over Government’s in efficiencies and wastage as contemplated in numerous Auditor-General Reports as well as reviews by means of worldwide corporations on public expenditure practices in Fiji. These reviews have highlighted the want for Government to seriously deal with its useful resource allocation and monetary control tactics.
Financial Planning Interview Questions
Question three. What Are Some Of The Problems With The Current Management Of Government Finances?
The Fiji Government’s modern financial control structure, has been in location because the Eighties with minor adjustments at some stage in the years. A evaluate of the contemporary shape discovered the following problems:
inadequate hyperlinks among government policy selections and implementation.
A focal point on the sources given to Government corporations in preference to how the groups perform with the resources allocated to them.
Central manipulate of budget by using the Ministry of Finance which contributes to gradual transport of carrier.
Terrible economic control and spending manage.
Question four. What Changes Will The Fmr Introduce?
The FMR will enhance and modernize the control of Government finances to:
higher align government coverage priorities with price range sources;
undertake a overall performance awareness;
provide greater powerful manage over public spending;
give a boost to accountability and transparency in economic management.
Question five. How Will The Fmr Bring About These Changes?
Through the implementation of the following four predominant components:
Financial Management Act 2004 – The Financial Management Bill is expected to turn out to be law in 2005. The rules has been drafted to give prison effect to the Financial Management Reform policy framework.
Financial Management Information System – to be delivered regularly, the brand new machine will aid the modifications by means of automating most current manual strategies, beef up the tracking of budgets and manage over spending.
Performance Budgeting - involves the allocation of sources to organizations primarily based on the goods and offerings to they supply. Therefore budgets will replicate the level of performance predicted with the resources provided. This can be related to the yearly corporate making plans method. More statistics is available in the “Guide to Performance Budgeting.
Training and Capacity Building – As the FMR procedure entails a enormous quantity of exchange over the years, education needs to be conducted in any respect levels to make sure the sustainability of the modifications.
Financial Accounting Interview Questions
Question 6. What Is Financial Management Information System (fmis)?
FMIS is financial management software program that transforms monetary information into information this is beneficial for selection- making. Government is in the process of obtaining a FMIS for the Whole of Government. This will replace the modern-day General Ledger System.
Question 7. How Is Fmis Related To The Financial Management Reform?
FMIS is a part of the FMR. The new FMIS is needed to:
Support the re-described framework.
Support the transition to accrual accounting.
Support the creation of Performance Budgeting.
Cost Accounting Interview Questions
Question 8. Why Do We Need A New Fmis?
There are some key troubles related to the modern system. These encompass:
Slow processing of transactions;
Inaccurate and untimely economic facts and reviews i.E. Information is not recorded on actual time.
Question 9. What Are The Benefits Of The Fmis?
Benefits of the FMIS consist of:
Automates maximum of the manual procedures e.G. Recording of Commitments;
Improves performance and effectiveness;
Provide choice makers with a device so as to assist responsibility, and decentralization of accounting techniques.
Management Accounting Interview Questions
Question 10. What Are The Main Responsibilities Of A Chief Financial Officer Of An Organization?
Responsibilities of Chief Financial Officer (CFO):
The leader economic officer of an employer plays an crucial function within the business enterprise’s dreams, guidelines, and financial achievement. His most important obligations encompass:
Financial evaluation and making plans: Determining the proper quantity of price range to be hired within the company.
Investment choices: Efficient allocation of price range to particular belongings.
Financial and capital shape selections: Rising of finances on favorable terms as viable, i.E., figuring out the composition of liabilities.
Management of economic assets (inclusive of operating capital).
Risk Management: Protecting property.
Question 11. Discuss Conflict In Profit Versus Wealth Maximization Objective?
Profit maximization is a brief–term goal and can not be the sole goal of a employer. It is at high-quality a confined goal. If income is given undue importance, a number of issues can get up just like the time period profit is indistinct, earnings maximization needs to be attempted with a realization of dangers involved, it does no longer don't forget the time pattern of returns and as an goal it is too slender. Whereas, on the other hand, wealth maximization, is an extended-time period goal and manner that the employer is using its sources in a good manner.
If the share fee is to stay high, the employer has to lessen its expenses and use the sources well. If the corporation follows the purpose of wealth maximization, it approach that the enterprise will promote simplest the ones regulations so as to lead to an green allocation of sources.
Financial Statement Interview Questions
Question 12. Differentiate Between Financial Management And Financial Accounting?
Though monetary management and economic accounting are closely associated, nevertheless they differ in the treatment of price range and additionally with regards to choice - making.
Treatment of Funds: In accounting, the size of budget is primarily based at the accrual principle. The accrual primarily based accounting statistics do no longer replicate absolutely the financial conditions of the enterprise. An corporation which has earned profit (sales much less costs) may said to be profitable inside the accounting sense however it is able to no longer be able to meet its contemporary duties due to shortage of liquidity as a result of say, uncollectble receivables. Whereas, the treatment of price range, in monetary control is primarily based on cash flows. The sales are recognized only whilst coins is truly received (i.E. Coins inflow) and prices are diagnosed on real payment (i.E. Cash outflow).
Thus, cash float based totally returns assist economic managers to avoid insolvency and obtain favored financial desires.
Decision-making: The chief awareness of an accountant is to collect records and gift the information whilst the monetary manager’s primary responsibility pertains to financial planning, controlling and selection- making. Thus, in a manner it can be said that economic control starts offevolved in which economic accounting ends.
Financial Planning Interview Questions
Question thirteen. Explain The Relevance Of Time Value Of Money In Financial Decisions?
Time fee of cash means that well worth of a rupee obtained these days isn't like the well worth of a rupee to be acquired in future. The preference of money now as compared to future money is called time desire for money.
A rupee these days is more valuable than rupee after a 12 months because of several motives:
Risk: there may be uncertainty approximately the receipt of cash in future.
Preference for present consumption
Most of the folks and businesses in wellknown, opt for modern-day intake over future intake.
Inflation: In an inflationary length a rupee nowadays represents a greater actual purchasing energy than a rupee a 12 months hence.
Investment opportunities: Most of the humans and groups have a choice for gift money because of availabilities of opportunities of funding for earning extra coins glide.
Many monetary problems contain coins float accruing at exceptional points of time for comparing such coins go with the flow an explicit consideration of time value of money is needed.
Question 14. Explain Briefly The Limitations Of Financial Ratios?
The obstacles of economic ratios are indexed below:
Diversified product traces: Many agencies function a big variety of divisions in quite distinctive industries. In such cases, ratios calculated on the basis of aggregate information can not be used for inter-firm comparisons.
Financial information are badly distorted by using inflation: Historical cost values may be substantially exceptional from real values. Such distortions of economic data also are carried in the monetary ratios.
Seasonal elements may impact monetary facts.
To give a terrific shape to the popularly used monetary ratios (like modern-day ratio, debt- fairness ratios, and so on.): The enterprise can also make some yr-stop modifications. Such window dressing can alternate the character of monetary ratios which would be one-of-a-kind had there been no such exchange.
Differences in accounting guidelines and accounting period: It could make the accounting records of two companies non-comparable as also the accounting ratios.
There is not any preferred set of ratios towards which a company’s ratios can be as compared: Sometimes a company’s ratios are as compared with the industry common. But if a company desires to be above the average, then enterprise common will become a low widespread. On the alternative hand, for a below average firm, enterprise averages emerge as too excessive a fashionable to achieve.
Question 15. What Do You Understand By Weighted Average Cost Of Capital?
Weighted Average Cost of Capital:
The composite or ordinary fee of capital of a company is the weighted common of the expenses of numerous assets of price range. Weights are taken in share of every supply of finances in capital structure while making financial selections. The weighted average fee of capital is calculated by calculating the price of specific source of fund and multiplying the value of every supply by its share in capital shape. Thus, weighted common fee of capital is the weighted average after tax costs of the man or woman additives of company’s capital structure. That is, the after tax price of every debt and equity is calculated one by one and introduced collectively to a single ordinary price of capital.
Corporate Finance Interview Questions
Question 16. Explain In Brief The Assumptions Of Modigliani-miller Theory?
Assumptions of Modigliani – Miller Theory:
Capital markets are perfect. All information is freely available and there's no transaction cost.
All traders are rational.
No existence of company taxes.
Firms can be grouped into “Equivalent chance training” on the premise of their commercial enterprise chance.
Question 17. What Is Optimum Capital Structure? Explain.
Optimum Capital Structure: Optimum capital structure offers with the issue of right mix of debt and equity inside the lengthy-term capital structure of a company. According to this, if a enterprise takes on debt, the value of the firm increases up to a certain factor. Beyond that cost of the company will start to lower. If the organization is not able to pay the debt within the targeted duration then it's going to have an effect on the goodwill of the organisation within the marketplace. Therefore, corporation have to pick its appropriate capital structure with due attention of all elements.
Financial Analyst Interview Questions
Question 18. Explain The Assumptions Of Net Operating Income Approach (noi) Theory Of Capital Structure?
Assumptions of Net Operating Income (NOI) Theory of Capital Structure According to NOI technique, there's no dating between the price of capital and price of the company i.E. The fee of the firm is impartial of the capital structure of the firm.
The corporate earnings taxes do no longer exist.
The marketplace capitalizes the fee of the firm as entire. Thus the split among debt and fairness isn't always important.
The growth in share of debt in capital structure ends in alternate in threat belief of the shareholders.
The average price of capital (Ko) remains constant for all tiers of debt equity mix.
Financial Accounting Interview Questions
Question 19. Explain The Principles Of "trading On Equity"?
The time period trading on equity method money owed are reduced in size and loans are raised in particular on the premise of fairness capital. Those who offer debt have a limited share inside the firm’s earning and hence want to be blanketed in terms of income and values represented with the aid of equity capital.
Since fixed prices do not vary with corporations income earlier than interest and tax, a magnified effect is produced on earning in line with proportion. Whether the leverage is favorable, in the feel, increase in income consistent with share extra proportionately to the multiplied earnings earlier than hobby and tax, depends on the profitability of investment proposal. If the charge of returns on funding exceeds their express fee, economic leverage is stated to be high quality.
Question 20. Differentiate Between Business Risk And Financial Risk?
Business Risk and Financial Risk:
Business threat refers back to the threat associated with the firm’s operations. It is an unavoidable risk due to the environment wherein the firm has to operate and the business threat is represented by means of the range of income earlier than interest and tax (EBIT). The variability in flip is prompted by means of sales and prices. Revenues and expenses are affected by call for of company’s products, versions in expenses and percentage of fixed price in overall cost.
Whereas, economic danger refers to the additional hazard positioned on firm’s shareholders due to debt use in financing. Companies that issue greater debt units might have better economic danger than groups financed mainly by fairness. Financial hazard can be measured by means of ratios along with firm’s financial leverage multiplier, total debt to belongings ratio and so on.
Financial Services Interview Questions
Question 21. Explain The Term 'ploughing Back Of Profits'?
Ploughing returned of Profits:
Long-term price range may also be provided by amassing the profits of the enterprise and via ploughing them again into business. Such price range belong to the regular shareholders and growth the internet really worth of the corporation. A public limited organization must plough back a reasonable quantity of its income each yr keeping in view the prison requirements on this regard and its own growth plans. Such finances additionally entail nearly no hazard. Further, control of gift owners is also no longer diluted via preserving profits.
Question 22. Discuss The Features Of Deep Discount Bonds?
Features of Deep Discount Bonds:
Deep discount bonds are a shape of 0-hobby bonds. These bonds are offered at discounted price and on adulthood; face value is paid to the investors. In such bonds, there's no interest payout throughout the lock- in period. The investors can promote the bonds in inventory marketplace and recognize the distinction among face value and marketplace charge as capital gain.
IDBI was the first to problem deep discount bonds in India in January 1993. The bond of a face price of Rs. 1 lack was sold for Rs. 2700 with a maturity period of 25 years.
Question 23. Explain The Methods Of Venture Capital Financing?
Some Common Methods of Venture Capital Financing:
Equity financing: The assignment capital challenge requires lengthy-time period budget however is unable to provide returns in preliminary stage so fairness capital is the great choice.
Conditional Loan: A conditional loan is repayable within the shape of a royalty after the assignment is capable of generate income. No interest is paid on such loans.
Income word: It is hybrid security; the entrepreneur has to pay each hobby and royalty on income but at substantially low prices.
Participating debenture: Such security carries expenses in 3 stages - inside the start-up phase, no hobby is charged, subsequent level a low rate of hobby as much as a specific stage of operation is charged, after that, excessive fee of interest is required to be paid.
Question 24. Explain The Concept Of Debt Securitization?
Debt securitization is a technique of recycling of funds. It is especially beneficial to financial intermediaries to assist the lending volumes. Assets producing constant cash flows are packaged together and in opposition to this assets pool, market securities can be issued. The debt securitization process may be categorized inside the following 3 functions.
The origination feature: The credit worthiness of a borrower looking for loan from a finance employer, bank, housing company or a leasing business enterprise is evaluated and a contract is entered into and reimbursement agenda is based over the existence of the mortgage.
The pooling feature: Similar loans or receivables are clubbed together to create an underlying pool of assets. This pool is transferred in favors of a special motive car (SPV).
The securitization function: After structuring, issue the securities on the premise of asset pool. The securities carry a chit and an anticipated adulthood, which can be asset based or mortgaged based totally. These are usually offered to traders thru merchant bankers.
The technique of securitization is normally with out recourse i.E. The investor bears credit hazard or danger of default and the user is under an obligation to pay to investor simplest if the coins flows are obtained by him from the collateral.
Cost Accounting Interview Questions
Question 25. Name The Various Financial Instruments Dealt With In The International Market?
Financial Instruments within the International Market: Some of the various economic gadgets treated inside the worldwide marketplace are:
Fully Hedged Bonds.
Medium Term Notes.
Floating Rate Notes.
External Commercial Borrowings.
Foreign Currency Futures.
Foreign Currency Option.
Euro Commercial Papers.
Question 26. Differentiate Between Factoring And Bills Discounting?
The variations among Factoring and Bills discounting are:
Factoring is referred to as as 'Invoice Factoring’ while Bills discounting is called ‘Invoice discounting.'
In Factoring, the parties are called the patron, element and debtor while in Bills discounting, they are known as drawer, drawee and payee.
Factoring is a form of management of e book money owed whereas payments discounting is a form of borrowing from business banks.
For factoring there's no specific Act, while within the case of payments discounting, the Negotiable Instruments Act is relevant.
Question 27. Explain The Concept Of Multiple Internal Rate Of Return?
In cases wherein challenge coins flows trade symptoms or opposite for the duration of the life of a project for example, an initial cash outflow is accompanied with the aid of coins inflows and sooner or later followed by using a primary coins out-float, there can be a couple of inner rate of go back (IRR).
Management Accounting Interview Questions
Question 28. Explain The Concept Of Discounted Payback Period?
Concept of Discounted Payback Period
Payback period is time taken to recover the original funding from project cash flows. It is also termed as damage even length. The awareness of the evaluation is on liquidity issue and it suffers from the issue of ignoring time cost of money and profitability. Discounted payback period considers gift price of cash flows, discounted at business enterprise’s fee of capital to estimate breakeven period i.E. It's far that duration wherein future discounted coins flows same the preliminary outflow. The shorter the length, higher it's far. It additionally ignores publish discounted payback length coins flows.
Question 29. Explain The Term "desirability Factor"?
Desirability Factor: In positive cases we need to compare some of proposals each involving distinctive amount of cash inflows. One of the strategies of evaluating such proposals is to training session, what's known as the ‘Desirability Factor’ or ‘Profitability Index’. In standard terms, a venture is suitable if the Profitability Index is more than 1.
Question 30. Explain Briefly The Functions Of Treasury Department?
The capabilities of treasury branch management is to make certain proper utilization, storage and hazard management of liquid price range as a way to make sure that the enterprise is able to meet its responsibilities, acquire its receivables and also maximize the go back on its investments. Towards this stop the treasury function may be divided into the subsequent:
Cash Management: The efficient collection and fee of coins each within the organization and to 1/3 parties is the function of treasury branch. Treasury generally manages surplus price range in an investment portfolio.
Currency Management: The treasury branch manages the foreign currency hazard exposure of the corporation. It advises on the foreign money for use while invoicing overseas sales. It additionally manages any net trade exposures according with the organization policy.
Fund Management: Treasury branch is chargeable for planning and sourcing the organisation’s short, medium and lengthy-time period coins desires. It also participates within the selection on capital structure and forecasts future hobby and overseas forex prices.
Banking: Since brief-time period finance can come in the shape of bank loans or through the sale of industrial paper within the money marketplace, consequently, treasury branch incorporates out negotiations with bankers and acts because the preliminary factor of touch with them.
Corporate Finance: Treasury department is worried with each acquisition and disinvestment sports within the institution. In addition, it's far frequently accountable for investor family members.
Question 31. Define Modified Internal Rate Of Return Method?
Modified Internal Rate of Return (MIRR): There are numerous limitations attached with the concept of the conventional Internal Rate of Return. The MIRR addresses some of these defiencies. For example, it removes multiple IRR charges; it addresses the reinvestment price difficulty and produces outcomes, which are regular with the Net Present Value method.
Under this method, all coins flows, aside from the initial investment, are brought to the terminal cost the use of the suitable discount fee(normally the cost of capital). This effects in a unmarried stream of cash inflow in the terminal yr. The MIRR is obtained through assuming a unmarried outflow in the zeroth yr and the terminal coins influx as cited above. The bargain price which equates the existing fee of the terminal coins in drift to the zeroth year outflow is known as the MIRR.
Question 32. What Is Finance For Non-monetary Managers?
All managers need to understand finance if they may be to play an energetic position in supporting their business enterprise reap its targets. Not all managers need the equal degree of skill and information as specialist economic managers, but a good information of the important thing concepts of prudent economic control - along with modern-day monetary accounting - should equip non-financial managers with the know-how they require.
The Finance for Non-Financial Managers qualification is designed to offer both employers and personnel with unbiased verification of the monetary knowledge of managers who do not without delay work within a finance role.
Question 33. Which Languages Is The Finance For Non-financial Managers Examination Available In?
The Finance for Non-Financial Managers examination is currently best available in English.
Financial Statement Interview Questions
Question 34. Can I Use The Finance For Non-economic Managers Logo?
The Non-Financial Managers emblem may additionally only be used with the permission of APMG-International. However, if APMG-International consider the emblem is being used in an beside the point manner, then we may also insist that the logo is utilized in a suitable alternative manner or is withdrawn from use. All materials so as to incorporate the logo need to be submitted to APMG-International for approval before book.
Question 35. What Is Free Cash Flow?
Free coins flow is the coins go with the flow that exists for distribution. It is available for all the securities holders of the enterprise. They include debt holders, favored stock holders, fairness holders, convertible holders and so on.
Question 36. Define Convexity?
Convexity is the measure of curvature that exists among bond expenses and bond yields. It helps in extra accurate estimations.
Corporate Finance Interview Questions
Question 37. Explain Credit Spread?
Credit unfold is the distinction among the fee of securities that have exceptional costs but similar hobby costs and maturities. It is also defined as the additional hobby this is paid by a borrower who has a decrease than a first-class credit score.