A monetary target that a business wants to achieve within a set period of time
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What types of objectives are there?
ROI, Capital structure, revenue, costs, profit and cash flow
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What is ROI a measure of ?
Profitability and performance
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What does ROI allow for?
Comparisons between alternative investment opportunities
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What is the formula for ROI?
Operating Profit / Initial Investment X 100
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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
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What is equity?
Capital invested by shareholders of a company, DOES NOT have to be paid back
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What is Debt?
Money borrowed which DOES have to be paid back
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How do you calculate the proportion of long-term funding that is debt?
Debt / Total long-term funding X 100
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What is the formula for profit?
Profit = Revenue - Total costs
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What are revenue objectives?
Targets set for the amount of money coming into a business from sales in a set period of time
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What are cost objectives?
The amount of money spent on expenditure in a set period of time
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What are profit objectives?
The amount of surplus to be achieved in a set period of time
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What is gross profit?
Sales revenue - cost of sales
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What is Operating profit?
Gross profit - expenses
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What is profit for the year?
Operating profit - interest and taxation
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What is cash flow?
The movement of money in and out of a business
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Why might cash and profit be different?
Credit sales, Bad debts, Heavy stock holdings, Investment in fixed assets, Seasonality and repayment of loans
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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
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