5 - Financial Objectives

Question 1

What Are The Financial Objectives?
(5 Points)

Answer 1

~ Return on investment (ROI).

~ Revenue.

~ Costs.

~ Profit.

~ Cashflow.

Question 2

Describe Revenue, Costs & Profit As A Financial Objective
(3 Points)

Answer 2

~ Profit -> Maximise profit.

~ Revenue -> Maximise sales.

~ Cost -> Minimise costs.

Question 3

Describe Cash Flow As A Financial Objective

Answer 3

Increase liquidity.

Question 4

Describe ROI As A Financial Objective
(2 Points)

Answer 4

~ Measure of a firms profitability and performance.

~ Expressed as a %, the higher the + number the better.

Question 5

What Is The Formula For ROI?

Answer 5

Operating Profit / Capital Invested x 100

Question 6

What Does A Higher + Figure Of ROI, Highlight For A Business?
(2 Points)

Answer 6

~ Highlights strong capital management and greater efficiency.

~ Useful for internal comparisons.

Question 7

What Are Drawbacks Of ROI?
(2 Points)

Answer 7

~ Isn’t adjusted for time.

~ Doesn’t take into account any qualitative factors.