Understanding financial objectives 0.0 / 5 ? Business StudiesFinancial PlanningA2/A-levelAQA Created by: Hayleyginny2345Created on: 05-11-13 19:01 What is a Financial Objective? Target set for the financial department of a business 1 of 17 What is Cash Flow? The money flowing in and out of a business 2 of 17 What types of organisation have cash flow as the main objective? A Bank 3 of 17 Cost Minimisation Aims to reduce all costs of production that a business incurs - Wages, Wastage, variables 4 of 17 Return on Capital Employed (ROCE) is Measure of the value of resources used by a business as a % 5 of 17 What does it mean if a business set a ROCE target as 25% It's net profit for the financial year will be 25% of the capital employed in the business 6 of 17 What does it mean by; 'Shareholder's returns'? Combination of short - term returns and future share prices and dividends 7 of 17 Internal influences on financial objectives are... A) The corporate objectives of the business B) The nature of the product that is sold C) Attitudes and aspirations of the business's senior managers 8 of 17 A) The corporate objectives of the business A fiancial objective is used by a business to achieve corporate objectives 9 of 17 B) The nature of the product sold E.G. - If a product is sensitive to price (elastic) managers will be more inclined to pursure cost minimisation as a financial objective 10 of 17 C) The attitudes and aspirations of managers of business If managers hold a lot of shares then increasing the shareholders value might be a good objective 11 of 17 External influences on financial objectives are... A) The actions of the business's competitors B) The avaliability of external finances C) The state of the market 12 of 17 A) The actions of the business's competitors Can't ignore competitors when setting financial objectives 13 of 17 B) The avaliability of external finances If a business have trouble raising capital then objectives are more likely to be on profitability 14 of 17 C) The state of the market If the market for product is expanding = more likely to set expansive financial objective - higher shareholders returns. ETC 15 of 17 External factors are classified in PESTLE P-political, E-economic, S-social, T-technological, L-legal, E-environmental 16 of 17 Other financial objectives include... Maximum sales, liquidity and gearing targets 17 of 17
Chapter 2 notes - BUSS3 - Understanding financial objectives - A2 AQA Business Studies Unit 3 5.0 / 5 based on 1 rating Teacher recommended
BUSS3 Chapter 2 notes - Understanding financial objectives - AQA A2 Business Studies Unit 3 Chapter 2 notes 5.0 / 5 based on 2 ratings
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