Role

• Profit is the ability to make a financial return from business activities
• Profit is measured using net profit from the income statement
• Growth is the increase in size and value of a business over time
• Growth is achieved by increasing the value of assets, market share, and diversification
• Efficiency is generating maximum returns for minimum costs
• Efficiency can be achieved by increasing outputs for the same inputs, or maintaining the same profit with lower assets
• Liquidity is the extent for a business to pay short term debt (current liabilities) and the ease to sell assets for cash
• It is essential to maintain current assets greater than current liabilities
• Having sufficient cash flow to meet obligations or convert to cash is important for liquidity
• Solvency is the ability of a business to pay short and long term debts and continue operating in the future
• Solvency indicates long term financial stability
• The Finance Objectives include

  Profit

  Growth

  Liquidity

  Solvency

  Efficiency