Question

In: Finance

Discuss key decision areas of corporate financial strategy

Expert Solution

A corporate financial strategy add value to an organisation which can be used to identify and exploit value creating opportunities.

A financial strategy has two components:

1. Raising of funds

2. Managing the employment of these funds.

A corporqte financial strategy is thw overall business strategy which are implemented through internal and external stakeholders:

a. Shareholders - Investment institutions, family members, prospective investors.

b. Community - Local community, environmental bodies, public at large.

C. Suppliers - long term suppliers, raw material suppliers, sub contractors.

D. Government and regulators

E. Employees

F. Managers - Boars of directors, senior managers, other managers.

G. Customers

H. Debt holders - banks, investment institutions and individuals.

A corporate financial strategy states how the firm raise and deploy their funds. It allows rising of the company's value from creating competitve advantage and successful financial strategy to imcrease cash flow aand reduce the cost of capital.

Key decision areas of corporate financial strategy. The decisions made while implementing corporate financial strategy:

1. How large should be th3 asset base be.

2. How much the finance should be debt and how much in equity.

3. How much profit should be paid out in dividend and how much retained.

4. Should new equit be issued.

jeff jeffy answered 2 years ago

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