Intro financial objectives

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Intro financial objectives

  1. 1. Functional objectives and strategies
  2. 2. Recap• What is a corporate objective?• What are business functions?• Can you give and example of a functional objective?• How are functional objectives and corporate objectives related?• What is the relationship between functional objectives and the functional strategies?
  3. 3. Financial objectives and accountsWhat we will examine;• The types of financial objectives businesses pursue• The external and internal influences on financial objectives
  4. 4. Key termsProfit- the surplus of revenues over total costsat the end of a trading periodCash flow- the movement of money in and outof a business over a period of timeReturn on Capital Employed- the net profits of abusiness expresses as a percentage of the valueof capital employed
  5. 5. Financial objectives• A goal or target pursued by the finance department within an organisation• Likely that it will contain a specific numerical element and also a timescale within which it is to be achieved• It will be set by the managers responsible for the finance of the business
  6. 6. Thought shower activity Financial objectives
  7. 7. Financial objectives• Return on capital employed (ROCE) targets• Shareholders’ returns• Cost minimisation• Cash flow targets
  8. 8. Internal influences on FO• Corporate objectives• Nature of the product that is sold• Objectives of the senior managers
  9. 9. External influences on FO• Actions of other businesses• Availability of external finance• State of the market
  10. 10. Analysis and evaluation questionPg. 11 of your textbookPlease answer ‘analysis and evaluationquestions’Q1. AQ2. B

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