Objectives or goals of business, Finance Basics

Objectives or Goals of Business

1. Profit maximization - This is a traditional and a cardinal objective of a business.  This is so for the following purpose:

  1. To its owners to earn acceptable returns. As i.e. have to not be less than bank rates + inflation + risk
  2. Therefore as to survive as via plough backs
  3. To meet its day to day obligations.

2. To maximize the net worth that is the difference between total liabilities and total assets.  This is important while:

  1. It influences company's share prices.
  2. It facilitates growth as plough backs.
  3. It boosts the company's credit rating.
  4. This is what that owners claim from the company.

3. To maximize welfare of staff - Happy employees will contribute to the success. This comprises:

  1. Transport facilities
  2. Reasonable salaries
  3. Medical facilities for the staff and his family
  4. Recreation facilities as sporting facilities.

4. Interests of customers - the company have to give quality goods at fair prices and have honest dealings along with customers.

5. Welfare of the society - the company has to sustain sound industrial relations along with the society:

  1. Ignored pollution
  2. Donation to social causes like example of Harambee contributions, building clinics etc.

6. Fair dealing along with suppliers.  A company should

  1. Ignored dishonor of obligations.
  2. Assemble its obligations on time

7. Duty to the government: A company must

  1. Pay taxes promptly
  2. Go via government plans
  3. Control under legal framework.
Posted Date: 1/29/2013 12:57:53 AM | Location : United States

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