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Financial Planning and Management

Chapter 4

Objectives of Financial Management

Liquidity

Liquidity is the ability of an organisation to pay its debts as they fall due

Profitability

Profitability is the ability of an organisation to maximise its profits

Efficiency

Efficiency is the ability of an organisation to manage its assets to maximise profits with the lowest possible level of assets

Growth

Growth is the ability of the organisation to increase its size in the longer term

Return on Capital

Return on capital is the amount of profit returned to owners or shareholders as a percentage of their capital contribution


The Planning Cycle


























Addressing present financial position

In order to determine where an organisation is headed and how it will get there, it is important to know where it is at now. Important financial information needs to be collected before future plans can be made. This financi...