FINANCIAL STRATEGY

OBJECTIVES & GOALS

 Goal is a desired result a businessman envisions, plans and commits to achievea personal or organizational desired end-point in some sort of assumed development.

TYPES OF OBJECTIVES
Financial Objectives
- an objective set by a company in which the target state is measured in monetary terms, such as a certain amount of profits, or a certain percentage increase in profits over a period of time.

 Societal Objectives
-are related to broader issues about providing benefits to society---making the
world a better place to live!

 Personal Objectives
-it includes self - gratification, status and respect.

STRATEGIC PROFIT MODEL

- is a method for summarizing the factors affecting the firms financial performance as measured by ROA.

Net Profit (after taxes)

Net Sales

Net Profit Margin

Net Sales

Return On Assets

Total Assets

Asset Turnover

COMPONENTS OF ROA:
Net profit margin

- is how much profit a firm makes divided by its net sales. Asset turnover
- is an overall performance measure from the asset management component.

PROFIT MARGIN MANAGEMENT PATH - it comes from the retailers income statement, which summarizes a firms financial performance over a period of time. Net Sales - refers to the total revenue received after all refunds have been paid to customers for returned merchandise.

Promotional allowances
- are payments made by vendors to retailers in exchange for the retailer promoting the vendors merchandise. Customer returns - represents the value of merchandise that the customers return and for which they received a refund of cash or a credit

Net sales = Gross amount of sales + Promotional Allowances Customer return Gross margin (gross profit) - it is an important measure in retailing because it indicates how much profit the retailer is making on merchandise sales without considering the expenses associated with the operating the store. -

Gross margin = Net sales Cost of goods sold

Gross margin is expressed as a percentage of net sales so that retailers can compare:
the performances of various types of merchandise their own performance with other retailers with higher or levels of sales.

Operating Expenses - are costs, other than the cost of merchandise, incurred in the normal course of doing business. It is also expressed as a percentage of net sales to facilitate comparisons across items and departments within firms.

Operating Expenses = Operating Expenses Net sales Net profit - it is a measure of overall performance with respect to the profit margin management path and can also be expressed before taxes.

Net profit = Gross margin Expenses Taxes