Questions Flashcards
Define the term retained profit.
Retained profit is profit that is not given to shareholders in the form of dividends but is held back as part of shareholder equity to provide a source of funds for possible future activities.
explain one advantage and one disadvantage for CH of having a mission statement
Advantages for CH of having a mission statement include:
* Provides an example of where a business currently sits in the eyes of its
stakeholders, such as customers, employees and managers. CH produces vital anti-venom vaccines, but its mission statement demands that CH carry out its operations in a socially responsible manner. Mission statements can have an influential role in setting organizational objectives.
* CH’s mission statement may act as a motivating force for employees and could lead to low staff turnover and/or benefits for the recruitment of new employees.
Disadvantages include:
* Some mission statements may be written as vague statements of intent. It can be
difficult to ascertain exactly what the business stands for in terms of setting sustainable business objectives. This may discourage some investors. CH is stating that profitability is secondary after CSR. Yet this profitability is being used to finance future growth and research. Investors may not commit funds given this perceived confusion from the mission statement.
