Finance – Business
Studies Year 12 2026 |
Study Guide, Practice
Questions, Answers,
Rationales & Exam Review
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Guide
Updated 2026 Questions and Answers
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Rationales
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, Role: - Finance refers to how a business pays for its operations.
Finance - Cost is crucial towards a business as it maximises profits.
Strategic role of financial management The role of the financial manager is to source finance that will enable the business
to reach its goals and to plan financial budgets for the business over years.
Importance of Financial Management If a business does not manage their finance, they can fail for a number of reasons:
- Lack of capital
- Too many long term assets
- Inadequate control of inventory and credit
- Lack of control over costs, therefore affecting sales and then profits.
Objectives of financial management The ability of a business to maximise its profits.
- Profitability
- Liquidity The ability of a business to pay off its short term debts as they fall due using its
assets.
- Efficiency The ability of a business to manage its expenses efficiently in order to maximise
profits.
- Growth The ability of a business to increase its size and therefore its profitability in the long
term.
- Solvency The ability of the business to meet its financial obligations in the long term, greater
than 12 month using its assets.
Gearing (same as solvency) It refers to how much debt the business is. If the business is highly geared the
business is in high debts. If the business is lowly geared the business is low in
debts.
- Short and long term - Short-term financial objectives are one to two years and operational plans of a
business. These would be reviewed regularly to see if targets are being met and if
resources are being used to the best advantage to achieve the objectives.
- Long-term financial objectives are determined for a set period of time, generally
more than five years. They tend to be broad goals such as increasing profit or
market share, and each will require a series of short-term goals to assist in its
achievement. The business would review its progress annually to determine if
changes need to be implemented.
Interdependence with other key business functions F&O
Operations manages stock and outsourcing whilst finance monitors the cost.
F&M
Marketing is the way most businesses generate sales. Sales help with managing
cash flow. Finance establishes budgets and forecasts marketing must follow.
F & HR
Finance provides funds for wages and HR strategies such as training and
development.
Influences on financial management: Internal sources of finance are from inside of the business. These sources can
Internal sources of finance include the capital contributed by the owners when the business began, reinvested
profits and the sale of unwanted business assets.
Studies Year 12 2026 |
Study Guide, Practice
Questions, Answers,
Rationales & Exam Review
| Complete Ethics Study
Guide
Updated 2026 Questions and Answers
100% Verified Exam Prep and Comprehensive
Rationales
Included
, Role: - Finance refers to how a business pays for its operations.
Finance - Cost is crucial towards a business as it maximises profits.
Strategic role of financial management The role of the financial manager is to source finance that will enable the business
to reach its goals and to plan financial budgets for the business over years.
Importance of Financial Management If a business does not manage their finance, they can fail for a number of reasons:
- Lack of capital
- Too many long term assets
- Inadequate control of inventory and credit
- Lack of control over costs, therefore affecting sales and then profits.
Objectives of financial management The ability of a business to maximise its profits.
- Profitability
- Liquidity The ability of a business to pay off its short term debts as they fall due using its
assets.
- Efficiency The ability of a business to manage its expenses efficiently in order to maximise
profits.
- Growth The ability of a business to increase its size and therefore its profitability in the long
term.
- Solvency The ability of the business to meet its financial obligations in the long term, greater
than 12 month using its assets.
Gearing (same as solvency) It refers to how much debt the business is. If the business is highly geared the
business is in high debts. If the business is lowly geared the business is low in
debts.
- Short and long term - Short-term financial objectives are one to two years and operational plans of a
business. These would be reviewed regularly to see if targets are being met and if
resources are being used to the best advantage to achieve the objectives.
- Long-term financial objectives are determined for a set period of time, generally
more than five years. They tend to be broad goals such as increasing profit or
market share, and each will require a series of short-term goals to assist in its
achievement. The business would review its progress annually to determine if
changes need to be implemented.
Interdependence with other key business functions F&O
Operations manages stock and outsourcing whilst finance monitors the cost.
F&M
Marketing is the way most businesses generate sales. Sales help with managing
cash flow. Finance establishes budgets and forecasts marketing must follow.
F & HR
Finance provides funds for wages and HR strategies such as training and
development.
Influences on financial management: Internal sources of finance are from inside of the business. These sources can
Internal sources of finance include the capital contributed by the owners when the business began, reinvested
profits and the sale of unwanted business assets.
