Objectives

• What is a financial objective?

  A specific goal related to financial performance
• What is one key benefit of setting financial objectives?

  Provides a focus for the entire business
• How do financial objectives help in investment decisions?

  They provide targets for investment appraisal
• What are the main types of financial objectives?

  • Revenue Objectives
  • Cost Objectives
  • Profit Objectives
  • Cash Flow Objectives
  • Investment Objectives
  • Capital Structure Objectives
• What is a common revenue objective for businesses?

  Sales maximisation through revenue growth
• What is cost minimisation in financial objectives?

  Controlling fixed costs to improve break-even
• What do profit objectives typically aim for?

  Maximising profits as part of corporate goals
• What is a common cash flow objective?

  Maintaining adequate cash flow for operations
• What does capital structure refer to?

  The balance of equity and debt in financing
• How do gearing ratios relate to capital structure objectives?

  They indicate the proportion of debt in financing
• What are return on investment objectives typically based on?

  Target percentage return on capital invested
• What is capital expenditure?

  Money spent on long-term capital goods
• What influences investment decisions?

  Expected return, interest rates, and demand
• How does business ownership influence financial objectives?

  Different ownership types prioritize objectives differently
• What is the impact of economic conditions on financial objectives?

  They can force reappraisal towards cost minimisation
• How do competitors affect financial objectives?

  They can necessitate cost minimisation strategies
• What is the role of social and political change in financial objectives?

  It may force businesses to adjust their investments
• What is a typical cash flow objective regarding debt?

  Maximum level of debt to manage risk
• What does the debt/equity ratio indicate?

  The proportion of finance from debt and equity
• How do interest rates influence financial objectives?

  They can threaten achievement of financial targets
• What is the significance of cash flow to profit ratio?

  It indicates the relationship between cash flow and profit
• What is the focus of start-ups regarding financial objectives?

  Survival, breakeven, and cash flow objectives
• How do functional objectives relate to financial objectives?

  They often have a financial dimension impacting finance
• What does PESTLE analysis consider in relation to financial objectives?

  Social and political changes affecting investments
• What is the impact of competitive efficiency on financial objectives?

  It may necessitate cost minimisation to compete