Question

a. what are the functions of a financial manager?

b. what agency relationship exist within a corporation?

Answer 1

A) Function of a financial manager are as follows:

• Forecasting of cashflow
• Raising funds
• Managing flow of internal funds
• To facilitate cost control
• To facilitate pricing of product
• Forecasting profit
• Managing assets
• Managing fund

B) The agency problem is a conflict of interest inherent in any relationship where one party is expected to work or act on Another's best interest.

In corporate finance the agency problem usually refers to a conflict of interest between a company's management and the company's stockholders.

Thus in case of corporation agency relationship of company's management and the company's stockholders arises which is like relationship between principal and agent.