Financial Objectives Flashcards
What are financial objectives?
Financial goals that a business wants to achieve.
What do businesses have in mind?
Targets and a specific time period
Who sets the financial objectives?
Financial managers
What must the financial objectives be consistent with?
The functional objectives
What can financial objectives improve?
Coordination between teams, Act as a focus for decision making and for investments.
Why do businesses look at their financial data?
To assess their financial position.
Why are revenue objectives set?
To increase the value or volume of sales
Why are costs objectives set?
To minimise costs
What will increase if costs are reduced?
Increase in overall profits
Why are profit objectives set?
To set a target figure for profit
What is cash flow?
Money flowing into and out of the business over a period of time
What is profit?
All transactions in and out
What could happen if a business allows payments to be made on credit?
Could damage their cash flow.
What happens if a business produces too much?
They will have to pay suppliers and staff so much - overtrading
Why are cash flow objectives put in place?
To help prevent cash flow problems
