Financial objectives focus on attaining adequate productivity in a company's chase of its task/dream, lasting health, and eventual endurance. Financial objectives sign assurance to such outcomes as good cash flow, creditworthiness, earnings growth, an acceptable return on investment, dividend growth, and stock price approval. (Thomas Strickland, p.7)
The following are examples of financial objectives:
Increase in revenues
Increase in earnings
Wider income limits
Better cash flows
Advanced proceeds on invested assets.
Smart and sustainable augments in market value added (MVA).
Strategic Objectives
Strategic objectives focuses on charming other market split, passing key challengers on product value or customer service or product improvement, attaining lower in general expenses than adversaries, captivating a stronger grip in global markets, using technical management. (Thomas Strickland, p.7)
Strategic objectives have to be competitor-focused and build up the company's long-term spirited position. The following are examples of strategic market objectives:
A better market split
Faster design-to-market period than competitors
Advanced produce value than competitors
Broader or smarter merchandise line than competitors
A stronger standing with consumers than competitors
Wider geographic exposure than competitors
Advanced levels of customer contentment than competitors
Strategic objectives are ended by the peak level administration defining the aims of the associations. Such as growing the trade is the strategic objective. On the other side, financial objectives are linked to the assets of the association. For example, reducing the price of debt is the financial objective. Strategic objectives are a bough of financial objectives in common.
Alternative source of finance available to the organization:
Sources of finance
Outdoor Living Ltd., an owner-managed corporation, has developed a new type of high temperature using solar supremacy, and has funded the improvement phases from its own assets. Market investigation point to the prospect of a large degree of command and an important quantity of extra assets will be essential to finance making.
Advise Outdoor Living Ltd. on:
a) The rewards and drawbacks of loan or justice resources.
b) The diverse sorts of assets probable to be accessible and the basis from which they might be attained.
c) The schemes of finance probable to be mainly reasonable to both the company and the source of finances.
There are many more sources obtainable to corporations who do not desire to develop into "community" by resources of split matters. These substitutes are as bellow. All have their own rewards and drawbacks and levels of threat attached.
Bank Lending- Borrowings from banks are an important source of finance to companies. Bank lending is still mainly short phrase, even though medium-term loan is pretty common these days.
Short phrase lending may be in the shape of:
a) An overdraft, which a corporation must maintain within a boundary set by the bank.
b) A short-term loan, for up to three years.
Medium-term loans are loans for a stage of starting 3-10 years. A loan might contain a permanent pace of interest or a changeable interest pace, so that the pace of interest charged will be accustomed every 3, 6, 9 or12 months in queue with current arrangements in the Base Lending pace.
Lending to minor corporations will be at an edge over the bank's stand pace and at also a changeable or permanent pace of interest. Longer-term bank loans will occasionally exist, generally for the purchase of assets, where the loan captures the shape of a mortgage.
Government assistance
The government affords finance to corporations in cash allowances and other shapes of straight support, as element of its strategy of helping to build up the national market, particularly in high skill trades and in regions of high joblessness. For example, the Indigenous Business Development Corporation of Zimbabwe (IBDC) was placed by the government to help tiny indigenous businesses in that country.
Venture capital
Venture capital is cash put into a project which might all be misplaced if the project fails. An entrepreneur opening up a new business will invest venture capital of his own, but he will probably need extra funding from a source other than his own pocket. However, the term 'venture capital' is more specifically associated with putting money, usually in return for an equity stake, into a new business, a management buy-out or a major expansion scheme. The executives of the corporation must then get in touch with project assets organisations, to try and discover one or more which would be ready to offer business. Examples of venture capital organisations are: Merchant Bank of Central Africa Ltd and Anglo American Corporation Services Ltd.
Franchising
Franchising is a process of growing trade on fewer capitals than would or else be essential. For suitable businesses, it is an alternative to raising extra capital for growth. Franchisors contain Budget, Rent-a-Car, Wimpy, Nando's Chicken and Chicken Inn.
In a franchising agreement, a franchisee pays a franchisor for the demand to run a local trade, under the franchisor's job name. The franchisor must tolerate sure expenses such as perhaps for designer's work, establishment expenses and lawful expenses, advertising expenses and the rate of other maintain forces, and will charge the franchisee an original franchise fee to wrap set-up expenses, relying on the ensuing standard expenses by the franchisee for effective revenue. These standard payments will usually be a proportion of the franchisee's earnings.
The advantages of franchises to the franchisor are as follows:
The assets expense essential to develop the trade is condensed sustainably.
The figure of the trade is enhanced as the franchisees will have the power to take whatever deed they believe athletic to get better results.
The franchisee is capable to avoid a few of the blunders of many small businesses, as the franchisor has previously learned from its individual past faults and developed a system that works.
Published financial statement and the uses of these statements:
Financial reports and statements
Financial means having to perform with currency and financial prosperity. Statement means a proper appearance. The term financial statement is moreover used, mainly by accountants. All or element of the financial report can be downloaded by anybody. Industries arrange three ain financial statements; the report of fiscal situation, or stability sheet. The report of cash runs; and the income report. These three type financial statements comprise the heart of the cyclic fiscal reports that are dispersed outer a trade to its shareowners and lenders. Internal financial report, even though stand on the similar revenue accounting techniques, details more in order to managers for judgment creation and organize. Financial statements can be used by consumers for diverse reasons:
Workers too need this information in building collective bargaining agreements (CBA) with the organization, in the case of work mergers or for persons in arguing their rewards, encouragement and positions. Potential investors create use of fiscal statements to consider the feasibility of spending in a trade.
Financial organizations use them to choose whether to fund a corporation with new working assets or expand liability securities (such as a lasting bank advance or debentures).
Government bodies (tax authorities) require financial statements to determine the modesty and exactness of taxes and other jobs affirmed and rewarded by a corporation.
Traders who expand credit to a trade involve financial statements to consider the creditworthiness of the commerce.
Media and the common community are also concerned in financial statements for a diversity of motives.
Budgeting and its role in an organization to achieve its strategic goals:
A budget (from old French bougette, reward) is a record of all designed charges and revenues. It is a sketch for saving and payments. A budget is an managerial chart fixed in fiscal conditions. The budget of a business is frequently accumulated yearly, but might not exist. A complete budget, normally involving substantial attempt, is a sketch for the immediate prospect, usually one year. Although usually the Finance department compiles the company's financial plan, current software allocates hundreds or even thousands of people in different departments (procedures, human capitals IT, etc.) to record their ordinary revenues and charges in the ultimate funds.
If the authentic facts carried throughout the budget phase come secure to the financial plan, this recommends that the directors appreciate their commerce and have been effectively motivating it in the planned route. On the other side, if the facts move away violently from the financial plan, this conveys an 'out of control' sign, and the split value could undergo as a result.
Budget types
Sales budget: The sales budget is an approximation of prospect sales, frequently wrecked down into mutually components and dollars. It is used to generate business sales objectives.
Production budget: Product adjusted corporations make a manufacture financial plan which guess the figure of components that should be affected to assemble the sales objectives.
Cash Flow/Cash budget: It is a forecast of prospect cash revenues and expenditures for an exacting time phase. It assists the trade establish when earnings will be enough to cover up charges and when the business will require to ask for external funding.
Marketing budget: The advertising financial plan is an approximation of the finances essential for encouragement, advertising, and public relations in order to market the product or service.
Project budget: The project budget is a forecast of the expenses linked with a exacting business plan. These expenses consist of work, resources, and other linked charges.
Revenue budget: The Revenue Budget consists of proceeds receipts of administration and the expenditure met from these revenues. Tax revenues are prepared of taxes and other duties that the government charges.
Expenditure budget: A budget category which consist of spending data stuff. In précis, the point of budgeting is to:
Give a project of revenues and expenditures i.e. build a copy of how our company might carry out economically interruption if positive strategies, proceedings and tactics are carried out. Facilitate the authentic fiscal process of the commerce to be deliberated against the project.
Risk management within an organization, the risk of (any organization on your own choice) and strategies to deal with these risks?
The Dramatic changing and also increasing pace of customer demands and market globalization all put risk management high on the massive and forward thinking organizations. And it's really important to have a comprehensive risk management strategy to survive in today's market place. In addition, the Cadbury committee's Report on corporate Governance (1992) states that having a process in place to identify major business risks as one of the key procedures of an effective control system is paramount. "If you can't manage risk, you can't control it. And if you can't control it you can't manage it. That means you're just gambling and hoping to get lucky". (J. Hooton, Managing Partner, Arthur Anderson & Co., 2000)
Risk management either applies on massive scale organization or small size business. It plays vital role in such areas where companies are engaged to do their day to day business. In this globalised world there are too many examples which we can evaluate but only those big firms has been gone down because of their inadequate risk management. Barings and Rail track in UK, Enron, Adelphia and WorldCom in the USA, and recently Parmalat, demonstrate the consequences of not managing risk properly.
Importance and benefits of managing risk
Following is the list of criteria for assessing effectiveness on the identification and evaluation of risks and control objectives:
Identification of key business risks in a timely manner.
Consideration of the likelihood of risks crystallizing and the significance of the resulting financial impact on the business.
Establishment of priorities for the allocation of resources available for control and the setting and communicating of clear control objectives.
The London Stock Exchange involves every listed corporation to comprise a statement in its annual report confirming that it is complying with this code, or by providing details of any areas of non-compliance. This has since been re-enforced and extended by the Turnbull Report (1999).
There are many more benefits of risk management. Here we can evaluate some of those:
1. Raised awareness of significant risks.
The massive problem and danger to any organization is failing to identify a risk until it's too late. In such case, organization can face problems in terms of reputation, security, money and internal morale. And on time identification of threats empowers a business to categories' and priorities risks and to deal with them in a timely and effective way.
2. Recognition of responsibility and accountability.
After identified possible risks, a company or organization can then appoint the most relevant party to deal with them. A powerful risk management process will ensure that once assigned, a risk can be tracked to ensure it is dealt with on time and effectively.
3. Identification of new opportunities
Whenever an organization identifies and deals with risks, it's easy to present a company with new opportunities that would have otherwise gone undiscovered. For example, where problems in remedying threats occur a company is presented with the opportunity to review and strengthen internal policy and procedures.
4. An action plan for effectively dealing with significant risks
Unfortunately it is all too often the case that a company is unaware of a risk before it becomes a significant threat to their business.
5. Enhanced corporate communication
The need to deal with risks in an effective manner instils a culture of communication throughout an organization. It also encourages better communication from management board to stakeholders with the news of how risks are being better managed.
Risk Management Process
The Council will adopt the following process to identify and manage risks. Further details of the proposed methodology are shown below.
Step
Description
Identifying risk
Important Strategic and key operational risks will be identified by an annual workshop review attended by Portfolio holders and Corporate Management Board.
Analyzing risk
It's easy for risk management to review and assess the likelihood of any risk arising and the consequences or impact it may have if it does arise.
Profiling risk
In this management it will be profiled according to the likelihood and severity in order to identify significant risks i.e. risks which may impact on the achievement of the Council's objectives
Prioritizing action based on the tolerance/ acceptance
of risk
The workshop review actions to address significant risks will be Prioritized based on the effectiveness of existing controls.
Determining action on risk
At service manager and departmental management meetings the best course of action will be considered and agreed.
Controlling risk
Once actions have been determined, nominated managers will take actions required to minimize likelihood of risk occurring. These actions will be built into service plans.
Monitoring and reporting on progress
Service Managers will annually compile a Departmental control assurance statement and risk register.
This will be forwarded to the Corporate Governance Group for evaluation. Service Managers will monitor progress of Their actions to control risk on a quarterly basis.
Balance Sheet
Balance Sheet is a most important aspect of accounting sector.
Example Company Balance Sheet
December 31, 2010
ASSETS
LIABILITIES
Liabilities
Current Liabilities
Cash
$1,100
Notes Payable
$33,000
Petty Cash
100
Accounts Payable
37,900
Temporary Investments
5,000
Wages Payable
7,500
Accounts Receivable - net
30,500
Interest Payable
1,700
Inventory
41,000
Taxes Payable
7,600
Supplies
2,800
Warranty Liability
2,700
Prepaid Insurance
1,000
Unearned Revenues
1,000
Total Current Assets
81,500
Total Current Liabilities
90,400
Investments
19,000
Long-term Liabilities
Notes Payable
94,400
Property, Plant & Equipment
Bonds Payable
430,000
Land
3,200
Total Long-term Liabilities
524,400
Land Improvements
5,400
Buildings
290,000
Equipment
300,000
Total Liabilities
614,800
Less: Accum Depreciation
(35,000)
Prop, Plant & Equip - net
563,600
Intangible Assets
STOCKHOLDERS' EQUITY
Goodwill
115,000
Common Stock
120,000
Trade Names
100,000
Retained Earnings
249,000
Total Intangible Assets
215,000
Less: Treasury Stock
(100,700)
Total Stockholders' Equity
268,300
Other Assets
4,000
Total Assets
$883,100
Total Liab. & Stockholders' Equity
$883,100
Conclusion
At the end, we can say that financial and strategic objectives are a vital part of any organization. These objectives take the organization to a successful level. The financial strategy is mainly reasonable for both the company and sources of finances. Any company can achieve their targets by using the sources as described. Moreover, financial statements are the main hub to maintain the budgets of any organization. Even these resources could be useful for employers of an organization. Budget is a sketch for success immediately normally one year for any organization. It helps executives to motivate their selves in business plans. It's very important to have a complete risk management strategy to endure in today's market. Risk management should be adequate in any organization either it is big or small to face the challenges in this globalised world. Balance sheet is an essential part of accounting sector in any business because it identifies the corporation's liabilities and assets into characteristic alignment such as current assets, property plant and equipment current liabilities; etc.
