Financial objectives Flashcards
(11 cards)
What are financial objectives?
Specific financial goals that a business wants to achieve
What are benefits of financial objectives?
Provides direction for the business
Attracts investors
Motivates employees
What are revenue objectives?
Goals businesses set to increase its income from sales and services.
What are cost objectives?
Goals businesses set to reduce expenses and improve efficiency and profitability.
What are profit objectives?
Goals businesses set to increase profit by increasing revenue or reducing costs.
What is cash flow?
The money going into and out of a business.
What is the difference between profit and cash flow?
Profit shows financial success whereas cash flow ensures the business has enough cash to operate.
What are cash flow objectives?
Comparing cash inflows and outflows to ensure a business has enough cash to meet its short-term debts.
What is return on investment?
How much profit you make from an investment compared to its cost.
What is the formula for return on investment?
Return on investment = profit from investment / cost of investment x 100
What is insolvency?
When a business is unable to pay off its debts.
