Skip to content

ACCA Strategic Professional · Advanced Financial Management · Financial strategy formulation

Which of the following best describes the primary objective that a senior financial adviser to a multinational should treat as the foundation of financial strategy, according to the AFM syllabus?

The foundation objective is maximising shareholder wealth, delivered through dividends and share price growth. Earnings per share is an accounting figure that ignores risk and cash timing, while market share and low borrowing are only supporting targets that may or may not increase shareholder value.

  1. AMaximising reported earnings per share each year
  2. BMaximising the wealth of shareholders through dividends and capital growthCorrect
  3. CMaximising the company's market share in each country
  4. DMinimising the group's total borrowing

Explanation

AFM treats shareholder wealth maximisation (dividends plus capital gains) as the central objective of financial strategy. EPS maximisation is a short-term accounting measure that can be manipulated and ignores risk and timing of cash flows. Market share and low borrowing are secondary or intermediate targets, not the ultimate objective.

Did you get it right without looking?

One question tells you little. A timed set on Financial strategy formulation shows your real accuracy, how long you take and where you lose marks.

Practise Financial strategy formulationFree diagnostic mock

More Financial strategy formulation questions