Business Studies Hsc Course Finance and Operation
Finance
Role of financial management * Financial management is the planning and monitoring of a business’ financial resources to enable the business to achieve its financial goals * Strategic plans encompass a long term view of where the business is going, how it will get there, and a monitoring process to keep track of progress along the way. * Tactical objectives are what a business aims to achieve in 1-2 years and operational objectives are set day-to-day. * To achieve long term financial objectives, it is crucial to set many tactical and operation objectives and constantly monitor the progress.
Objectives of Financial management
Profitability
* Profitability
Liquidity
Efficiency
Growth
Solvency
Profitability
Liquidity
Efficiency
Growth
Solvency
The ability of a business to maximise its profits to ensure sustainability * Must monitor its revenue and pricing policies, costs and expenses, inventory levels and levels of assets.
Growth
* Increase the size in the long run to ensure the business is sustainable in the future * Develop and use assets to increase sales, profit and market share
Efficiency
* Use resources efficiently to ensure financial stability * Monitor the levels of inventories and cash and the collection of receivables
Liquidity
* The ability to meet short term financial commitments by turning assets into cash or having a positive cash flow
Solvency
* The ability to meet financial commitments in the long-term. * An indication to potential investors of the risk associated with the business
Influences on Financial Management
Sources of Finance
* With a bank overdraft, the bank allows a business or individual to overdraw their account up to an agreed limit and for a specified time, to help overcome a temporary cash shortfall. * Commercial bills are a type of bill of exchange (loan) issued by institutions other than banks. * A bill of exchange is a document
Role of financial management * Financial management is the planning and monitoring of a business’ financial resources to enable the business to achieve its financial goals * Strategic plans encompass a long term view of where the business is going, how it will get there, and a monitoring process to keep track of progress along the way. * Tactical objectives are what a business aims to achieve in 1-2 years and operational objectives are set day-to-day. * To achieve long term financial objectives, it is crucial to set many tactical and operation objectives and constantly monitor the progress.
Objectives of Financial management
Profitability
* Profitability
Liquidity
Efficiency
Growth
Solvency
Profitability
Liquidity
Efficiency
Growth
Solvency
The ability of a business to maximise its profits to ensure sustainability * Must monitor its revenue and pricing policies, costs and expenses, inventory levels and levels of assets.
Growth
* Increase the size in the long run to ensure the business is sustainable in the future * Develop and use assets to increase sales, profit and market share
Efficiency
* Use resources efficiently to ensure financial stability * Monitor the levels of inventories and cash and the collection of receivables
Liquidity
* The ability to meet short term financial commitments by turning assets into cash or having a positive cash flow
Solvency
* The ability to meet financial commitments in the long-term. * An indication to potential investors of the risk associated with the business
Influences on Financial Management
Sources of Finance
* With a bank overdraft, the bank allows a business or individual to overdraw their account up to an agreed limit and for a specified time, to help overcome a temporary cash shortfall. * Commercial bills are a type of bill of exchange (loan) issued by institutions other than banks. * A bill of exchange is a document