Financial Objectives 0.0 / 5 ? Business StudiesFinancial PlanningASAll boards Created by: hamishcCreated on: 18-04-16 20:46 What are financial objectives? Financial goals that a business wants to achieve in a period of time. 1 of 15 Who are financial objectives set by? Financial managers. 2 of 15 What are advantages of financial objectives? They can improve coordination, set a focus for decision making, allow shareholders to decide on whether to invest. 3 of 15 What are the 6 types of financial objectives? Revenue, costs, profit, cash flow, return on investment, capital expenditure objectives. 4 of 15 What is cash flow? All the money flowing into and out of the business over a period of time. 5 of 15 Why is cash flow important? Business needs cash in the short term to survive, e.g. buy raw materials and make products. 6 of 15 List 3 things that can cause a business to have poor cash flow? Allowing credit on payments, investing too much money, overtrading (producing so much, it can no longer pay its debt to employees etc..) 7 of 15 Why are cash flow objectives used? To help prevent cash flow problems. 8 of 15 What is return on investment? A measure of how efficient an investment is. 9 of 15 What is the ROI equation? ROI = return on investment / cost of investment X 100 10 of 15 What is capital? Wealth in the form of money or other assets owned by the business. 11 of 15 What is capital expenditure? The money spent to buy fixed assets. 12 of 15 What is capital structure and what is it made up of? The way a business raises capital to purchase assets. Made of debt capital (borrowed funds) and equity capital (share money). 13 of 15 Give 3 internal factors that influence financial objectives. Overall objectives of the business, the status/ maturity of the business, other areas of the business (labour turnover etc..) 14 of 15 Give 3 external influences on financial objectives Competitor actions, the state of the economy, desires of shareholders. 15 of 15
Comments
No comments have yet been made