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Shareholders are legal owners of the firm so as assistant financial analyst, while managing our finances,
we should keep in mind that we should maximize the shareholders wealth. Shareholders wealth can be
maximize by maximizing the market value of shares. All the decisions that the financial managers or
analyst must incorporated this goal. If the financial decisions and investment decisions are poor, investors
may react to those decisions which result in decrease in the market price of the share. Instead, if the
financials and investment decisions are good enough, investors react by increasing the price of shares.
This ultimately makes wealth for the shareholder.[ CITATION Pet121 \l 1033 ]
Similarly, AMR can also maximize shareholder wealth by investing in real estate or investment products
building their credit, and boosting stock prices. Corporation can access large sum of capital with
favorable loan terms by building credit which allows financial expansion and wealth generation.
Company can boost stock prices to increase earnings per share and dividend pay outs by investing in real
estate by renting out unused real property and excess productive capacity.
The value of firm is reflected by the market price of firm’s share which is the objective of shareholders.
This goal can be achieved by making investment decisions i.e. capital investing decisions, making
decisions on how to finance these investment, i.e. how to finance the development and production of
minerals and managing fund for the company’s day to day operation i.e. working capital decisions. While
making such decisions financial analyst or financial manager must keep in mind that they are eventually
functioning for the shareholders who are the owners of firm.[ CITATION Pet121 \l 1033 ]
4. Yes, AMR have accountabilities apart from responsibilities to the firm’s owners. Accountability is
answerability. One having accountability towards something must be able to explain one’s actions for
whatever they are accountable for. One must be able to explain the result of action as well as how that
happened and why it happened. Thus, apart from responsibilities toward firm’s owners, AMR must be
accountable for its action and the activities it has carried. It is a kind of reporting to the owners. For
example, while making decision on the funds to day to day operation, i.e. working capital requirement
for the particular month became more than requirement. It may increase the cost in the business which
may result in reduction of profit of the company and owners may raise question, in such situation, the
financial analyst or manager must be able to answer the cause of increase in cost as well as the effects.
Similarly, financial assistants are required to answer questions directly from internal stakeholders, such as
budgeting department personnel or senior finance managers, or external agencies, such as customers or
suppliers.[ CITATION Acc \l 1033 ]
Thus, these are some of the other accountabilities that AMR should have apart from responsibilities to the
firm’s owner.
References
Accountability Vs Responsibility--What's the Difference?-InvestorGuide.com. (n.d.). Retrieved from
ww.investorguide.com: http://www.investorguide.com/article/15946/accountability-vs-
responsibility-d1502/
Petty, J. W., Titman, S., Keown, A. J., Martin, J. D., Martin, P., Burrow, M., et al. (2012). Financial
Management. Frenchs Forest NSW 2068: Pearson Australia.
The corporate social responsibility of Australian mining, oil and gas organizations. (n.d.). Retrieved from
ww.miningoilgasjobs.com.au: http://www.miningoilgasjobs.com.au/mining/all-you-need-to-
know-about-the-mining---metals-sec/building-better-community-relationships.aspx