Financial and Non Financial Objectives LO To understand

Financial and Non Financial Objectives LO: To understand what financial and non financial objectives are

Objectives must be …. • • • S – specific M – measurable A – achievable R – realistic T - timed S. M. A. R. T LO: To understand what financial and non financial objectives are

Why set objectives ? • • Sets out what the business aims to do Allows the business to set targets Sets a common goal E. g Heinz aims for their Tomato Ketchup. . ”to be the world’s favourite ketchup” LO: To understand what financial and non financial objectives are

LO: To understand what financial and non financial objectives are How are they achieved ? Objective Sales maximisation Profit maximisation Increase market share Survival How is it achieved ? Problems ?

Financial Objectives • Shareholder returns • Cost minimisation • Cash flow targets LO: To understand what financial and non financial objectives are

Shareholder Returns A business must make sure it meets the needs of its owners. Many shareholders assess a business based on the dividends received. Examples; • A high dividend per share • Increasing the share price LO: To understand what financial and non financial objectives are

LO: To understand what financial and non financial objectives are Cost Minimisation This can benefit a business by; Keeping its prices the same and having a higher level of profit Using it to reduce costs to reduce selling price and increase their level of custom These targets should be set with caution as raw materials may lead to lower quality. Examples; • Lower priced raw materials • Lower levels of wastage • Reducing wage costs

Cash Flow Targets Examples; Cash-flow is the money coming in (inflows) and out (outflows) of a business • Reducing the bank overdraft by a certain sum by the end of the year • spreading its costs more evenly Many businesses get into difficulty due to a lack of cash flow rather than lack of profitability. • Setting a contingency fund.

LO: To understand what financial and non financial objectives are Non – financial objectives • Employee/Owner satisfaction • Quality • Customer Service • Helping Others

Different organisations Type of organisation Objective Sole trader Partnership Limited company Co-operative Public Corporation Social Enterprise LO: To understand what financial and non financial objectives are