The targets of each functional area of a business which are based around the corporate objectives
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What are corporate objectives?
Objectives that relate to the business as a whole and are set by top management as a focus
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Give 3 examples of what corporate objectives are often stated in terms of?
Profit (value, margin), market share, growth (profit, earnings per share), cash flow, sales revenue, shareholder value
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How can objectives be used?
Through motivating employees, reducing uncertainty, providing a target & providing a clear focus for decision making
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Why do we set objectives?
Please stakeholders, motivation, measure progress, assess the future
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What is the formula for profit?
Profit = Total revenue - Costs
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What are profit margins?
The amount (or %) of the final selling price that is profit
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What does profit depend on?
Quantity (or volume) of sales & Margins (the mark up)
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Why is profit important?
Bigger returns on investors, businesses may appear more successful & appealing to customers, high profits are likely to to encourage institutions & investors to allow expansion
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What is revenue?
The amount of money coming in
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What is the formula for revenue?
Revenue = Price x Quantity
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What are fixed costs?
Costs that do not vary in direct proportion to the level of output produced
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What are variable costs?
Costs that do vary in direct proportion to the level of output produced
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What is break even?
Where revenue covers costs and profit = £0
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Other cards in this set
Card 2
Front
What is an aim?
Back
A long term, broad goal of what the business hopes to achieve in the future
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