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    Approach & Model Answers: 10 Marks. 150 Words. 2 Pages

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    The document provides guidance on answering questions about financial management concepts. It includes an approach and model answer for two sample questions. For the first question on distinguishing between controllership and treasury functions, the approach recommends using a chart or table to clearly illustrate the differences between the terms. The model answer presents the concepts in a table format, highlighting that treasurers deal with acquiring and using funds while controllers focus on record keeping and compliance. For the second question on the functions of a financial manager in a large company, the approach notes it is an essay question requiring breadth and depth. The model answer discusses investing, financing, dividends and additional functions like risk management and regulatory compliance for large firms.

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    Approach & Model Answers: 10 Marks. 150 Words. 2 Pages

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    The document provides guidance on answering questions about financial management concepts. It includes an approach and model answer for two sample questions. For the first question on distinguishing between controllership and treasury functions, the approach recommends using a chart or table to clearly illustrate the differences between the terms. The model answer presents the concepts in a table format, highlighting that treasurers deal with acquiring and using funds while controllers focus on record keeping and compliance. For the second question on the functions of a financial manager in a large company, the approach notes it is an essay question requiring breadth and depth. The model answer discusses investing, financing, dividends and additional functions like risk management and regulatory compliance for large firms.

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    01c. Model Answer

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    The document provides guidance on answering questions about financial management concepts. It includes an approach and model answer for two sample questions. For the first question on distinguishing between controllership and treasury functions, the approach recommends using a chart or table to clearly illustrate the differences between the terms. The model answer presents the concepts in a table format, highlighting that treasurers deal with acquiring and using funds while controllers focus on record keeping and compliance. For the second question on the functions of a financial manager in a large company, the approach notes it is an essay question requiring breadth and depth. The model answer discusses investing, financing, dividends and additional functions like risk management and regulatory compliance for large firms.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    27 views3 pages

    Approach & Model Answers: 10 Marks. 150 Words. 2 Pages

    Uploaded by

    Platform 9.75
    The document provides guidance on answering questions about financial management concepts. It includes an approach and model answer for two sample questions. For the first question on distinguishing between controllership and treasury functions, the approach recommends using a chart or table to clearly illustrate the differences between the terms. The model answer presents the concepts in a table format, highlighting that treasurers deal with acquiring and using funds while controllers focus on record keeping and compliance. For the second question on the functions of a financial manager in a large company, the approach notes it is an essay question requiring breadth and depth. The model answer discusses investing, financing, dividends and additional functions like risk management and regulatory compliance for large firms.

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    Approach & Model answers

    Question 1. Distinctively explain ‘Controllership’ and ‘Treasury’ functions of Financial


    Management. 10 Marks. 150 words. 2 pages

    Approach to answer:
     Pay attention to the word ‘Distinctively’. Means do not inter-mingle the concepts. Also do not write general
    meaning. Better to write in chart and tabular form to clearly demonstrate both the terms.
     Must write similarity and inter-relationship also as both come under same discipline of Financial
    Management.
     Conclude with relative significance of both in today’s context.

    Model Answer: financial management relates to money matters, focusing acquisition and
    utilization of funds. Both functions seem similar, even used inter-changeably. Conceptually
    they differ as presented below:

    Treasurers deal with acquisition and utilisation of funds, liquidity management. They make
    financial plans, maintain relations with fund providers, manage trade credit & business and
    financial risks. They are growth champions. They lead at front. He may not be CA. Good
    business sense is essential.

    Controllers keep the things in order as per plans, laws, principles and decisions. Thereby they
    emphasize record keeping, compliance with regulatory, accounting and reporting requirements.
    Maintain relations with government agencies on matters of corporate governance such as SEBI,
    Stock Exchanges, tax authorities. Through audit function they ensure authenticity of records
    and transactions. Must be expert in corporate matters such as CA.

    Similarities: both need similar academic back-ground i.e. Finance. In a small firm single
    professional such as CA may discharge both the duties. In large firm both report to CFO. Role of
    both is complimentary.

    Ranker’s Classes Mini Test Series (FM: Unit 1. Nature of FM) June11, 2020 Page 7
    Question 2. (UPSC 2005): Critically examine the functions of a Financial Manager in a large-
    scale industrial establishment. 20 Marks. No word limit. Four page limit.

    Approach:
     Since it is 20 mark question, candidates should write with open mind and show the examiner
    breadth and depth of your thinking on the topic. 20 marker questions are called Essay type
    questions. Hence cover various dimensions including Past-present-future; local-global;
    variety of problems of industrial enterprises concerning finance function.
     Critically does not means positives & negatives only. Write different angles, problems and
    issues, ifs, buts on the topic asked.
     Functions signify three broad functions of Investing, Financing and Dividend. In context of
    large enterprise (by size, products, global reach) more functions should be covered such as
    risk management, relationship management, CSR, regulatory, BCP etc.
     Write current financial problems financial crisis, liquidity issues due to Covid 19 problem.
     Must use the words “large scale industrial establishment or firm” to given examiner
    feeling of staying connected for focused on demand of the question. Else answer may seem to
    be very theoretical.

    Model Answer:
    Finance function relates to acquisition and utilisation of funds with object of
    maximization of wealth of the enterprise. There are three broad functions of finance managers
    in any enterprise- Investing, financing and dividend. In a large sized industrial enterprise these
    functions get multiplied, complex and thereby difficult to manage. In detail these are:
    1. Investing: it is main function that determines future earnings and flows. Investing in
    profitable and sustainable projects for large enterprise is daunting task as heavy amount is
    involved. Business risk is high. Technologies are changing. Exploration of new avenues and
    business models requires finance mangers to be visionary such as Reliance going for
    Telecom.
    2. Financing: Determining right level of capital and capital structure requires analysis and
    examination into status of the firm, options available, mindset of investors. Managers have
    to avoid both over & under capitalization by using modern tools of financial forecasting.
    Alternated funding arrangements, contingent capital, options are helpful. Leverage can help
    reduce over cost of capital but it brings financial risk, more so in case of IBC.

    Ranker’s Classes Mini Test Series (FM: Unit 1. Nature of FM) June11, 2020 Page 8
    3. Dividend function: managers have to decide about dividends to fulfill firm’s needs of
    liquidity, investor expectations, maintaining track of earnings. Liquidity and earning
    forecasts become essential besides regulatory compliances. In a large firm fund outflow is
    heavy if dividend policy is liberal. It may hamper liquidity and growth plans.
    4. Risk management- it is emerged as most important function for firm working on large
    scale. As a business partner finance managers have to aim advice and focus on business
    continuity, market share, revenue growth, innovations, strategies to protect against financial
    risks etc. Business & Finance functions have fused today.
    5. Regulatory- since large sized firms use funds from wider public and even global sources,
    compliance with numerous becomes essential. Else legal issues may hamper financial
    position, penal action and goodwill.
    6. Change management- finance managers have to keep vigil over changing pattern of
    financing, investing, liquidity management and technology etc. They have to act has shock
    absorbers in times of change and crisis like Covid 19.
    Today finance managers have to discharge functions in a dynamic manner on account of
    dynamic, complex and global business environment. Firms like BHEL are facing financial
    problems due to slow change in business models. Success of Reliance Industries is combined
    effort of both finance managers and business strategists.

    Ranker’s Classes Mini Test Series (FM: Unit 1. Nature of FM) June11, 2020 Page 9

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