Setting Finanical Objectives Flashcards
What is a financial objective
Goal or target persued by the financial department within an organisation
What is SMART
S pecific
M easurable
A greed
R ealistic
T imed
What does setting a Financial objective ensure
- Being able to judge performance of the business and set targets
- helps identify issues
- Helps motivate workers
Examples of financial objectives
- revenue,cost and profit
- cash flow
- investment levels
- capital
Objectives for investment levels and returns
selling level of capital
setting a return on investment
How to calculate return on investment
Operating profit divided by capital Invested x 100
What are non current assets
Items that a business owns and expects to retain for one year or more
what is capital structure
Refers to way a business raises capital to purchase an asset
What is loan capital
Raising capital by borrowing money
What is share capital
Raising capital by selling shares
What is high gearing
High % in loans
What is low gearing
Low % in loans
Internal influences on financial objectives
- objectives of business e.g growth and profit
- nature of product sold
External influences on financial objectives
- competitive environment e.g high or low competitive market
- economic conditions
- technology environment e.g improving tech
- political and legal environment e.g brexit
