Introduction To Finance

Question 1

Financial Aims

Answer 1

The broad general goals of the finance and accounting function within an organisation

Question 2

Financial Objectives

Answer 2

The specific, focused targets of the finance and accounting function of an organisation

Question 3

Financial Strategies

Answer 3

Long-term and medium-term plans, decided at senior management level, and designed to achieve the firms financial objectives

Question 4

Financial Tactics

Answer 4

Short-term financial measures adapted to meet the needs of the short-term threat or opportunity

Question 5

Examples of Financial Objectives

Answer 5

Make a profit
Reduce expenses
Increase efficiency
Break even at year 1

Question 6

Cash Flow Targets

Answer 6

More money going into the business than money going out

Question 7

Cost Minimisation

Answer 7

Reduce costs so profit margins are bigger

Question 8

Shareholder’s Return

Answer 8

Shareholders get a return on the money they invested

Question 9

ROCE Targets

Answer 9

Return on Capital Employed

Question 10

Capital

Answer 10

Start-up money

Question 11

Internal factors that may impact financial objectives being achieved

Answer 11

Employee motivation 
Employees taking sick days or holiday
Strike action
Poor quality products
Maintenance
Staff training

Question 12

External factors that may impact financial objectives being achieved

Answer 12

Competitors
Tax being raised
Media
Pressure groups
Inflation
Recession
War
Exchange rates
Suppliers