Finance extended response

Finance extended response

  • Submitted By: androhia
  • Date Submitted: 05/05/2014 3:22 AM
  • Category: Business
  • Words: 1112
  • Page: 5

Evaluate the strategies a business could use to achieve its financial objectives
 
Introduction
Business success is reliant on the ability to achieve financial objectives. One financial objective businesses may strive towards is maximising profits, which can be achieved by the strategies profitability management and global financial management. Also the liquidity can be improved through utilising cash flow and working capital strategies, as shown by Google Incorporated, an industry leading innovator in the technology industry.
 
Maximising Profit
Profits are generally regarded as the main reason for running a business, and therefore can be considered one of the most important objectives. By maximising profits, the business is ensuring it's capability to meet financial commitments in both the short and long term whilst also satisfying investors and shareholders.
 
Profitability Management
Profitability management involves the control of both revenue and costs of a business. By utilising up to date financial data and reports, businesses can improve their profitability through monitoring and controlling. To achieve the financial objective of maximising profits, revenue must be increased and costs must be reduced. Marketing objectives can aid the selling of a product through having customer orientation and using research and development to increase sales and in turn increase revenue. Google's evident market dominance comes from their high level of market research, and understanding the most appropriate places to advertise, reflected by their 2012 $50.18 billion revenue. However having a high revenue does not directly lead to increased profits, as profits are derived from after expenses are deducted from the revenue. Eighty percent of Google's revenue is lost on expenses due to their high electricity bills, maintenance of GooglePlex and also paying the Google staff. These cost centres, particular areas or departments which costs are directly attributed,...

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