3.5 Decision making to improve financial performance

Question 1

Companies set revenue, costs and profit objectives

Answer 1

• Revenue objectives are often set to increase the value or volume of sales
• Costs objectives are usually set to minimise costs
• Profit objectives might set a target figure for profit or for a percentage increase from the previous year.

Question 2

cash flow

Answer 2

• all the money flowing into and out of the business over a period of time, calculated at the exact time it enters or leaves the bank account or till.

Question 3

cash flow objectives

Answer 3

• put in place to help prevent cash flow problems.
• may set objectives to spread revenue or costs more evenly throughout the year, acquire a specified amount of liquid assets or target a minimum cash balance.