ExpertEasy2 marksMultiple Choice
ACCA · Question 01 · Financial Management Function
Section A
GlobalHealth Initiative is a non-governmental organization (NGO) providing medical supplies to remote regions. Unlike a commercial pharmaceutical company, GlobalHealth does not seek to maximize shareholder wealth.
Which of the following best describes the primary financial objective framework most appropriate for GlobalHealth Initiative?
Section A
GlobalHealth Initiative is a non-governmental organization (NGO) providing medical supplies to remote regions. Unlike a commercial pharmaceutical company, GlobalHealth does not seek to maximize shareholder wealth.
Which of the following best describes the primary financial objective framework most appropriate for GlobalHealth Initiative?
Answer options:
A.
Maximizing earnings per share (EPS) to attract donor funding.
B.
Achieving Value for Money through Economy, Efficiency, and Effectiveness.
C.
Maximizing the net present value (NPV) of all medical supply distribution projects.
D.
Minimizing the weighted average cost of capital (WACC).
How to approach this question
Recall the financial objectives of Not-For-Profit (NFP) organizations. Since they lack shareholders, they focus on the efficient use of funds to achieve their mission, known as Value for Money (VFM).
Full Answer
B.Achieving Value for Money through Economy, Efficiency, and Effectiveness.✓ Correct
Not-for-profit organizations (NFPs) and NGOs do not have shareholders, so wealth maximization is not applicable. Instead, they aim to maximize the benefits provided from limited resources. This is measured using the Value for Money framework, comprising Economy (spending less), Efficiency (spending well), and Effectiveness (spending wisely to achieve outcomes).
Common mistakes
Students often select NPV maximization, forgetting that NGOs prioritize social impact over financial returns.
Practice the full ACCA FM — Financial Management Practice Exam 4
32 questions · hints · full answers · grading
More questions from this exam
Q02**Section A**
QuantumTech is a highly geared software startup. The central bank of the country w...MediumQ03**Section A**
AgriGrow Co, a large agricultural cooperative, is experiencing cash flow difficult...MediumQ04**Section A**
MetroWater PLC, a public utility company, is evaluating a massive infrastructure p...EasyQ05**Section A**
Crescent Holdings, a cross-border multinational, wishes to raise $50 million for a...MediumQ06**Section A**
Titanium Forge PLC, a heavy manufacturing firm, has an equity beta of 1.40. The co...Medium