Define financial objectives of an organisations.

Finance ManagementAccountingAcademic Content

Organisations need different set of objectives, to attain their success. These objectives give a plan or directions to the organisation to meet their long term goal.

Some of the objectives are explained below −

  • Revenue

Revenue generation is the main objective of an organisation. It plays an important role in project life cycle. Revenue generation helps an organisation to plan its marketing and other necessary things in the business.

  • Margins

After all sales and expenses, money left after is called profit. Profit plays an important role in business cycle as they generate money for next projects and developments of business.

  • Operational activities

Operational activities keep business running. Development of business depends on how well an organisation manage its operational activities.

  • Productivity and efficiency

Incentivise for the performances will increase employees’ performances and productivity, which helps in increasing productivity.

  • Sustainability

Sometimes company’s main concern is to keep its brand name and its survival. Common monetary objectives for survival include gathering of all their debts, de-leveraging by paying off its debts.

  • Net revenue

After calculating all costs, the amount generating all the stock compensation, interests, taxes and amortisation paid is called net revenue. It is used to reinvest in the business or is distributed to the shareholders.

  • Liquidity

If a firms runs out all its balances and it may turn as a defaulter, this triggers actions to creditors, suppliers and counterparties.

  • Cash flow

Cash flow are important to run the business. Firm concentrates on its cash flow though, they are not getting profits.

  • Return on investment

Based on return on investments a firm will plan its projects, their investments accordingly.

  • Return on capital

It measures on the rate at which capital is employed by an organisation.

raja
Published on 12-Aug-2020 14:54:34
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