Financial Objectives

What is the main objective of a business according to the document?

• To provide employment

• To make money

• To innovate products

• To expand globally

How is profit defined?

• Revenue minus taxes

• Revenue minus investments

• Greater revenue/income than its expenses

• Revenue minus liabilities

How often are profits recorded?

• Monthly

• Quarterly

• Yearly

• Daily

What does liquidity refer to in the context of a business?

• Long-term investments

• Short-term cash flow

• Asset management

• Profit margins

What is cash flow?

• The cash coming into and out of a business

• The cash invested in assets

• The cash reserved for emergencies

• The cash used for marketing

Why do start-up businesses need to spend a considerable amount of money initially?

• To pay off debts

• To earn a revenue or income

• To hire employees

• To buy office supplies

Why do businesses offering trade credits or accounts need to manage their cash flow?

• To ensure there is enough money to pay monthly bills

• To invest in new projects

• To expand their market

• To increase their profit margins

What does solvency relate to in a business context?

• The ability to generate profit in the short term

• The ability to meet debt obligations in the long term while maintaining the value of its assets

• The ability to expand rapidly without financial instability

• The ability to reduce operational costs

What can happen to a business if it grows too fast, too soon?

• It can become highly profitable

• It can enter a stable financial position

• It can become insolvent as the debt value outweighs assets

• It can reduce its liabilities

What is the role of the Australian Securities and Investments Commission (ASIC) when a business becomes insolvent?

• To provide loans to the business

• To appoint an accounting firm to manage the insolvency process

• To merge the business with another company

• To reduce the business's tax obligations