3.1 Role of finnacial management

Question 1

What are 5 objectives of financial management?

Answer 1

• Profitability (Earning after expenses are paid)
• Efficiency (How much expenses in total sale)
• Liquidity(Ability of business to pay short term debt)
• Solvency (Ability of business to pay both short and long term debt)
• Growth (Size of the business compare to competitors)

Question 2

What is short term objectives?

Answer 2

• Objectives that can be achieve less then 12 months

Question 3

What is long term objectives?

Answer 3

• Objectives that can be achieved after 12 months

Question 4

How can objectives conflict each other?

Answer 4

• Short term objectives require additional costs and successful management for liquidity, therefore might damage long term objectives such as growth and profitability.