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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
Understanding Financial Objectives
Financial Aims: the broad, general goals of the finance and accounting function or
department within an organisation.
Financial Objectives: the specific, focused targets of the finance and accounting
department within an organisation.
Financial Strategies: long-term or medium term plans, devised at senior
management level, and designed to achieve the firm's financial objectives.
Financial Tactics: short-term financial measures adopted to meet the needs of a
short-term threat or opportunity.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
ROCE Targets
The success of a business is invariably demonstrated by its profit levels. Clearly, large
firms will achieve higher profit levels than smaller businesses, so the profit needs to
be compared to the size of a business. E.g.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
Internal Influences on Financial Objectives
Internal factors that affect financial objectives are those within a business, such as
its workforce, resources and financial position.
Corporate Objectives:
The overall aims of an organisation are a key influence on the objectives of a
functional area, such as the finance department. The finance department must
ensure that its objectives are consistent with the corporate objectives of the
business.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
External Influences on Financial Objectives
External factors are those outside the business, such as the state of the economy
and the actions of competitors. PESTLE describes external factors that can affect a
business.
Political Factors:
Financial objectives are often guided towards the wishes of the shareholders.
However, the great openness has also led to expectations on businesses to serve
the needs of other groups, such as the workforce, customers, the local community
and the environment.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
Using Financial Data to Measure and
Assess Performance
Two key financial documents kept by a firm are:
Balance Sheet
- A document describing the financial position of a company at a
particular point in time, by comparing items owned by the company
(assets) with the amounts it owes (liabilities)
Income Statement
- An account showing the income and expenditure (and thus profit or
loss) of a firm over a period of time (usually a year)
Revenue/Capital Expenditure
Business…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
Balance Sheets
The balance sheet looks at the accumulated wealth of the business and can be used
to assess its overall worth. It lists the resources that a business owns and the items
it owes.
In addition, it shows the capital provided by the owners.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
An income statement describes the income and expenditure of a business over a
given period of time.
Purpose of the profit and loss account ­
o Regular calculations of profit throughout the year help managers to review
progress before the final end-of-year accounts are completed.
o To satisfy legal requirements to do so.
o Publication allows stakeholders to see if a firm is meeting their needs.
o Comparisons can be made between two different firms.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
Liquidity ­ the ability to convert an asset into cash without loss or delay
The working capital shows the net current assets of a firm. It is the day-to-day
finance used in a business, consisting of current assets minus current liabilities. It is a
measure of liquidity, and firms generally want to have between 1.5 and 2 times as
many assets than liabilities.…read more

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FINANCIAL STRATEGIES AND ACCOUNTS] BUSS3 - AQA
Failure to control inventory levels
Poor controls of receivables
Poor controls of payables
Cash flow problems
Poor internal planning and coordination
External factors
Solving problems:
Inventory control - Low inventory levels mean no storages costs, however
you miss out in purchasing economies of scale.…read more

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