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ACCA Strategic Professional · Advanced Financial Management · The role and responsibility of senior financial executive/advisor

A multinational's board asks its senior financial adviser to recommend a dividend policy for the group. Which consideration is most directly the adviser's responsibility?

The adviser should balance shareholders' dividend expectations against retained funds for positive-NPV investments, and consider the group's ability to remit cash from overseas subsidiaries, including tax and exchange controls. Raising dividends regardless of earnings, setting audit fees or allocating bonuses are not the adviser's core dividend-policy role.

  1. ABalancing shareholders' dividend expectations against retained funds for positive-NPV investment and the group's ability to remit cash from overseas subsidiariesCorrect
  2. BEnsuring that dividends are always increased each year regardless of earnings
  3. CChoosing the auditor's fee for the year
  4. DDeciding which employees receive bonuses in each subsidiary

Explanation

Dividend policy involves reconciling shareholder expectations with investment needs, available cash and the practicalities of remitting funds from subsidiaries, including tax and exchange controls. Automatic annual increases ignore earnings and investment needs, and the other options are not financial strategy decisions for the adviser.

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