Chapter 2: Using Financial Objectives
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- Created on: 10-12-14 10:04
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- Using Financial Objectives
- Types of financial objectives
- Cash Flow targets
- maintaining minimum closing monthly cash balance
- creating a more even spread of sales revenue
- spreading costs more evenly
- setting contingency fund levels
- achieving a certain level of liquidity
- raising levels of cash at certain times
- Cost Minimisation
- relocating to 'least-cost' site
- reducing wage costs per unit
- lower waste levels
- improving efficiency of production
- achieving economies of scale
- ROCE
- achieve a ROCE that exceed previous years
- achieve a ROCE that exceeds competitors
- achieve a ROCE which is favourable in the indutsry
- Shareholder's Return
- high dividend per share
- high dividend yield
- high earnings per share
- increasing share price
- Other financial objectives
- sales maximisation
- liquidity and gearing targets
- financial efficiency targets
- financial objectives for individual projects
- Cash Flow targets
- Reasons for setting financial objectives
- act as a focus for decision making
- provide a yardstick to measure success or failure
- improve co-ordination by giving a common purpose
- improve efficiency by examining reasons for success or failure
- allow other organisations to confirm financial viability of business
- allow shareholders to see if business is a worthwhile investment
- Internal Influences on financial objectives
- Corporate objectives
- consistent with corporate objectives
- Human Resources (HR)
- depends on effort and skill of workforce
- Operational factors
- relies on operations to manufacture products
- Resources available
- need strong resources base
- Nature of the product
- depend heavily on goods or services
- Corporate objectives
- External Influences on financial objectives
- Political
- Economic
- Social
- Legal
- Environmental
- Technological
- Types of financial objectives
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