All businesses in today’s world have one objective in mind – to make money. Irrespective of the size of the organization all businesses are running with the objective of making profits. Goals and objectives of finance in business are to ensure that the organisation achieve its goals of making money by ensuring that the organization as a whole achieve other objectives as well. Other objectives important for the organisation are process, production, people and promotion maximization. Once an organisation ensures that these objectives are met it results in profit for the organisation.
Generally the goals and objectives of finance in business are
Return on Investment- Every business is funded by investment and its imperative for business that the investment grows in the business so that the business can make money. Return on Investment is a financial ratio applied to capital expenditure. The ROI ratio is concerned with two aspects first is the capital investment in terms of property, machinery and vehicles. It’s the objective of the business to generate enough money through these capital investments to justify their purchase cost. Secondly, ROI is also concerned with investments in stocks, bonds and other investment instruments
- Increasing Revenue Growth – The most basic objective of any business is to increase the revenue. Increasing revenue is achieved by increasing sales and marketing activities. The focus is on top line earnings, which is concerned with earnings before expenses. Most organizations look at setting a percentage increase goal and work hard for achieving that objective.
- Profit Margins– Profit is concerned with the bottom line earnings. Profit is basically the revenue generated over the sales revenue after deducting the expenses. This Profit can be used to invest in the expansion of the business and also for can be used for distribution among the employees as part of a profit sharing arrangement. Profit goals of an organization are concerned with revenue making sure that the cost are kept low by acquiring raw material at lower price or keeping the cost of production low in order to increase the profit margins.
- Sustainability – Its also an objective of finance in business to sustain itself in times of economic crisis and turbulence. This objective can be achieved by keeping the debts really low and maintaining consistent income levels.
iACT Global is a education and training organization which helps businesses in achieving financial goals and objectives by providing various Financial management courses which can contribute to long term growth oriented strategy for the business. Enroll now!