Decision Making To Improve Financial Performance

Question 1

What does financial performance need to be measured against

Answer 1

Financial performance needs to be measured against the business’ objectives

Question 2

What are the benefits of financial objectives

Answer 2

Financial objectives provide direction
Financial objectives can be used to support decision making
Financial objectives can be used to motivate employees

Question 3

How might a businesses use return on investment

Answer 3

A business may use return on investment as a financial objective

Question 4

How can return on investment be measured

Answer 4

Return on investment can be measured using (profit from investment) ÷ investment cost) × 100

Question 5

What does return on investment allow a business to calculate

Answer 5

Return on investment allows a business to calculate the efficiency of a project by comparing the amount invested with the amount returned

Question 6

How might a businesses use long term funding targets as

Answer 6

A business may use long-term funding targets as a financial objective