Understanding Financial Objectives

A business can be described as a(n)

• disorganized method of manufacturing products.
• organized effort to produce goods and services.
• reasonable way to make a profit.
• unreasonable means for increasing revenues

Financial analysis occurs when a business

• communicates with potential customers
• keeps accurate expense records
• plans for long-term success
• effectively retrieves data

Survival in a business situation means:

• Making products cheaper than competitors

• Making sure the business continues to operate

• Making less profit than last year

• Providing good service rather than making profit

A business might want to grow because:

• It sees the opportunity of making more profit

• Growth will mean more people working in the business

• It is the best objective to have

• It will guarantee more profit

A business might change its aims and objectives because:

• All businesses change their objectives after a year

• A new competitor has become very successful

• It feels that a change will always bring more profits

• It is essential to change objectives as a business grows

Which of the following is NOT a benefit to a business of setting objectives?

• Business performance can be measured against targets

• Can be used to motivate the workforce

• Clear direction for decision makers

• Increased manager workload

A business has set an objective to increase profit by 2% each year. If the business made £50,000 profit last year, what would its profit objective be this year?

• £1,000

• £51,000

• £52,000

• £60,000

Which of the following stakeholders is most likely to have profit as an objective?

• Owners

• Employees

• Suppliers

• Customers

Which of the following statements best defines the term, market share?

• The increase in total sales made by a business

• The percentage increase in sales made by a business

• The increase in total market sales

• The percentage of total market sales sold by one business

In relation to a start-up business, which of the following best describes the term, social objective?

• To maximise the amount of sales generated by the business

• To ensure the entrepreneur can keep full control over decision making

• To improve the financial performance of the business

• To help society as a whole and make a positive effect on others