Financial objectives

HideShow resource information
  • Created by: konradeke
  • Created on: 30-03-16 15:09
What are financial objectives?
A monetary target that a business wants to achieve within a set period of time
1 of 20
What types of objectives are there?
ROI, Capital structure, revenue, costs, profit and cash flow
2 of 20
What is ROI a measure of ?
Profitability and performance
3 of 20
What does ROI allow for?
Comparisons between alternative investment opportunities
4 of 20
What is the formula for ROI?
Operating Profit / Initial Investment X 100
5 of 20
What is long-term funding?
The amount of capital that has been invested in a busienss and will stay in the business for over a year
6 of 20
What is equity?
Capital invested by shareholders of a company, DOES NOT have to be paid back
7 of 20
What is Debt?
Money borrowed which DOES have to be paid back
8 of 20
How do you calculate the proportion of long-term funding that is debt?
Debt / Total long-term funding X 100
9 of 20
What is the formula for profit?
Profit = Revenue - Total costs
10 of 20
What are revenue objectives?
Targets set for the amount of money coming into a business from sales in a set period of time
11 of 20
What are cost objectives?
The amount of money spent on expenditure in a set period of time
12 of 20
What are profit objectives?
The amount of surplus to be achieved in a set period of time
13 of 20
What is gross profit?
Sales revenue - cost of sales
14 of 20
What is Operating profit?
Gross profit - expenses
15 of 20
What is profit for the year?
Operating profit - interest and taxation
16 of 20
What is cash flow?
The movement of money in and out of a business
17 of 20
Why might cash and profit be different?
Credit sales, Bad debts, Heavy stock holdings, Investment in fixed assets, Seasonality and repayment of loans
18 of 20
What are some internal influences?
Factors from within the business, Corporate and other functional objectives, Characteristics of the firm, Relationship between owners and directors, Public or private sector
19 of 20
What are some external influences?
Competitors, Consumers, Economic conditions, External environment
20 of 20

Other cards in this set

Card 2

Front

What types of objectives are there?

Back

ROI, Capital structure, revenue, costs, profit and cash flow

Card 3

Front

What is ROI a measure of ?

Back

Preview of the front of card 3

Card 4

Front

What does ROI allow for?

Back

Preview of the front of card 4

Card 5

Front

What is the formula for ROI?

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Financial Planning resources »