Chapter 16: Setting Financial Objecitves

Question 1

Financial objectives

Answer 1

Goal or target pursued by the finance department within an organisation

Question 2

Income statement

Answer 2

Record a business sales revenue and all relevant costs

As well as profit and loss

Question 3

Gross profit

Answer 3

Income received from sales minus the costs of goods and services sold

Question 4

Direct costs

Answer 4

Expenditure that can clearly be allocated to a particular area of the business

Such as raw materials

Question 5

Indirect costs

Answer 5

Expenditure that relates to all aspects of a business activities

Such as maintenance costs

Question 6

operating profit

Answer 6

Financial surplus arising from a business normal trading activities and before tax

Question 7

Profit for the year

Answer 7

Measure of profit taking into account a wider range of expenditures and incomes

Including tax

Question 8

Revenue

Answer 8

Earnings or income generated by a firm as a result of trading activities

Question 9

Objectives

Answer 9

Medium to long term goals established to coordinate the business

Question 10

Investment

Answer 10

Purchase of assets such as property and vehicles

Used for a long time

Question 11

Non current assets

Answer 11

Items a business owns and expects to retain for 1 year or longer

Property and vehicles

Question 12

Capital expenditure

Answer 12

Spending to purchase non-current assets

Another name for investment

Question 13

capital structure

Answer 13

Way a business raises capital to purchase assets