Chapter 23
all businesses will have financial objectives
new businesses may just aim to survive at first and then look to break-even or hit a specific profit level etc.
Working Capital
the capital of a business which is used in its day to day trading operations, calculated as the current assets minus the current liabilities
having accounting and financial objectives is the fundamental way of measuring a business
when setting financial objectives there are a lot of things to think about such as:
other objectives
budget
legal status and size
state of economy
level of competition
government policies
Work of Monetary Policy Committee
legislation
financial data will be used for/by:
directors to make important decisions
potential investors to decide whether to invest
banks to decide whether to lend
suppliers to assess whether to give trade credit
providing legal accounts
competitors to make comparisons
clear objectives allow
targets to aim for
monitoring of progress
departments/employees to understand the business
departments to formulate their own objectives
assess impact of potential changes
window dressing encourages shareholders to hold or purchase more shares