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

S.M.A.R.T 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

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

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

Cost Minimisation This can benefit a business by; 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 Examples; Lower priced raw materials Lower levels of wastage Reducing wage costs These targets should be set with caution as raw materials may lead to lower quality.

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

Non – financial objectives 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