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The Strategic Role of Financial Management in Finance Market

Uploaded by joeydaprof (2101) on Jun 12, 2006

is also known as the P• Profit and Loss Statement or the Statement of
Financial Performance, Profit is simply the difference between revenues and
Profit = Revenue - Expenses

• If revenues exceed expenses (R >E), the business is generating a profit and

the wealth of the business is increased.
• If revenues are less than expenses (R < E), then the business is making a
loss and net wealth falls.
• Revenues refer to the income generated by a business from its operations.
Income may come from sources such as:
• Sales
• Commissions
• Rent on buildings the business owns

Expenses refer to the costs incurred by the business in the course of

operating. The most common types of expenses are:
• Rent
• Wages
• Electricity
• Advertising
The Revenue Statement summarises the revenues and expenses of a
Gross profit is equal to the total revenue of a business, less the cost of goods
sold (COGS) in return for that revenue. COGS is calculated by adding together
inventory purchases and inventory at the start of the year, and then subtracting
any left over inventory from this figure. Net profit is equal to gross profit less
Gross profit - expenses = Net profit

Revenue - COGS = Gross Profit

The Balance Sheet (also known as the Statement of Financial Position) gives
information about an entity's financial position at a particular point in time. The
Balance Sheet is based on the accounting equation A = L+ OE claims
The Balance Sheet breaks assets (and liabilities) down further by classifying
them as current or non-current:
• Current assets (liabilities) - where the future economic benefits (losses) will
be realised within the next 12 month e.g. Cash at bank (A) or accounts
payable (L).
• Non-current assets (liabilities) - where the future economic benefits (losses)
are NOT likely to be realised within the next year e.g. Motor vehicles (A) or
long term loans (L)
The Revenue Statement affects the balance sheet by affecting the owner's
equity account. The revenue statement explains how the balance sheet got
from where it was at the end of the last reporting period.
Australian Accounting Standard 28 requires all reporting entities to produce a
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Journal of Strategic Marketing publishes papers on key aspects of the
interface between marketing and strategic management. It is a vehicle
for discussing long-range activities where marketing has a role to play
in managing the long-term objectives and strategies of companies. The
objectives of the Journal are as follows: To bridge the disciplines of
marketing and strategic management, and to address the development
of knowledge concerning the role that marketing has to play in the
management of strategy. To provide a vehicle for the advancement of
knowledge in the field of strategic marketing and to stimulate research
in this area. To consider the role of marketing as an orientation of
management at the strategic level of organizations. Explore the overall
management of the marketing function within total corporate
management, with particular focus on issues of concern to marketing
managers, directors and vice presidents. To publish state of the art
papers, empirical research results, practical aspects of theory, case
studies, new methodological developments, conceptual developments,
and to encourage published discussion on articles. Issues that the
Journal covers include: Marketing philosophy in corporate
management. The role of marketing in strategic planning. Marketing
information systems in relation to company wide needs. Market and
industry stakeholder needs. International strategies. SBU analysis and
decision making. Marketing related synergies. Integrating marketing
planning with strategic planning. The management of marketing-led
change. The development and utilization of marketing plans. Resource
allocation in strategic and marketing plans. HRM related to marketing
personnel. The implementation of strategic and marketing plans.
Marketing effectiveness at the operational and strategic levels. The
utilization and development of control systems.

Further information