BUSINESS STUDIES – FINANCE | COMPLETE
STUDY GUIDE & PRACTICE QUESTIONS
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
,Role of financial management Financial management is the planning and monitoring of a business's financial
resources to enable the business to achieve its financial objectives. Financial
management is crucial if a business is to achieve its financial goals. The
mismanagement of financial resources can lead to problems.
Strategic role of financial management The long-term or strategic role of financial management is to ensure that a
business achieves its goals and objectives. This can only be accomplished if the
business's finances are managed effectively. The strategic role of financial
management includes:
• setting financial objectives and ensuring the business is able to achieve these
goals
• sourcing finance
• preparing budgets and forecasting future finances
• preparing financial statements
• maintaining sufficient cash flow
• distributing funds to other parts of the business.
,Objectives of financial management For a business to achieve its longer term goals it must have a number of
shortterm, specific objectives. The objectives of financial management are to
maximise
the business's:
• profitability
• growth
• efficiency
• liquidity
• solvency.
The responsibility of financial management is to make decisions about the best
way to achieve those objectives. This will involve identifying and evaluating
alternative courses of action and making recommendations.
, Case Study: McDonald's McDonald's uses a combination of past-year results, overall future plans a
Objectives of financial management general economic conditions to set objectives for future time periods. In 2017,
McDonald's announced some long-term financial targets as well as some that
relate specifically to 2017.
Profitability - increase profit
Growth - increase growth
Efficiency - increase efficiency
Liquidity - reduce by returning cash to shareholders
Solvency - increase debt/return equity to shareholders
Profitability Profitability is another important financial objective of management.
Profitability is the ability of a business to maximise its profits. Profits satisfy
owners or shareholders in the short term but are also important for the longer
term sustainability of a firm. To ensure that profit is maximised, a business must
carefully monitor its revenue and pricing policies, costs and expenses,
inventory levels and levels of assets.
Growth Growth is the ability of the business to increase its size in the longer term.
Growth of a business depends on its ability to develop and use its asset
structure to increase sales, profits and market share. Growth is an important
financial objective of management as it ensures that the business is sustainable
into the future.
STUDY GUIDE & PRACTICE QUESTIONS
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
,Role of financial management Financial management is the planning and monitoring of a business's financial
resources to enable the business to achieve its financial objectives. Financial
management is crucial if a business is to achieve its financial goals. The
mismanagement of financial resources can lead to problems.
Strategic role of financial management The long-term or strategic role of financial management is to ensure that a
business achieves its goals and objectives. This can only be accomplished if the
business's finances are managed effectively. The strategic role of financial
management includes:
• setting financial objectives and ensuring the business is able to achieve these
goals
• sourcing finance
• preparing budgets and forecasting future finances
• preparing financial statements
• maintaining sufficient cash flow
• distributing funds to other parts of the business.
,Objectives of financial management For a business to achieve its longer term goals it must have a number of
shortterm, specific objectives. The objectives of financial management are to
maximise
the business's:
• profitability
• growth
• efficiency
• liquidity
• solvency.
The responsibility of financial management is to make decisions about the best
way to achieve those objectives. This will involve identifying and evaluating
alternative courses of action and making recommendations.
, Case Study: McDonald's McDonald's uses a combination of past-year results, overall future plans a
Objectives of financial management general economic conditions to set objectives for future time periods. In 2017,
McDonald's announced some long-term financial targets as well as some that
relate specifically to 2017.
Profitability - increase profit
Growth - increase growth
Efficiency - increase efficiency
Liquidity - reduce by returning cash to shareholders
Solvency - increase debt/return equity to shareholders
Profitability Profitability is another important financial objective of management.
Profitability is the ability of a business to maximise its profits. Profits satisfy
owners or shareholders in the short term but are also important for the longer
term sustainability of a firm. To ensure that profit is maximised, a business must
carefully monitor its revenue and pricing policies, costs and expenses,
inventory levels and levels of assets.
Growth Growth is the ability of the business to increase its size in the longer term.
Growth of a business depends on its ability to develop and use its asset
structure to increase sales, profits and market share. Growth is an important
financial objective of management as it ensures that the business is sustainable
into the future.
