Financial Objectives
- Created by: zelizabeth
- Created on: 15-03-14 22:47
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- Financial Objectives
- Cashflow targets
- A financial objective focused on maintaining a healthy cash balance
- Return of investment, reducing bank overdraft, spreading costs more evenly throughout the year
- A firm which doesn't set/achieve a healthy cash flow targets may struggle to survive due to liquidity problems
- tactical aspect of cash flow management and improving cash flow
- Cost minimisation
- the process by which businesses attempt to maximise profits by keeping costs low
- if they can minimise costs without having a negative effect on revenue, then the profit margins will be improved
- Cost minimisation could be achieved by a tactical decision such as changing suppliers or through a more strategy decision such as to relocate abroad
- Reducing raw materials, improve efficiency
- ROCE
- Return on capital employed targets
- The minimum % return a business strives to achieve from the capital employed in business activities
- net profit/capital employed x100
- Shareholders return
- the financial rewards to a shareholder in return for their investment, can include dividends paid and increased share value
- a high dividend per share
- increasing the share price
- Internal influences
- Characters of the firm
- size
- status
- age
- product/service
- Owners
- depends on relationship between owners and directors
- Sector
- eg; private investors, private sector etc.
- Opportunity cost
- cost minimisation may reduce quality or workforce morale
- corporate objectives
- financial objectives need to be consistent with the overall corporate objectives of the business
- Characters of the firm
- External influences
- competitors actions
- economic conditions
- suppliers
- PESTLE
- Political
- Economic
- Social
- Techonological
- Legal
- Environmental
- Cashflow targets
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