LONG-TERM FINANCIAL PLANNING 1

Long term financial planning related to corporate Finance

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LONG-TERM FINANCIAL PLANNING 2

Long term financial planning related to corporate Finance

Abstract

Companies around the world are required to plan for their short-term and long-term

business avenues. The planning horizon of firms vary on the basis of numerous factors. The

notion of long-term financial planning focuses on the investments needed to fund the long-term

goals of a business, and how these goals will be finances, and how the required finances are

raised and allocated in an efficient manner (Baker, & Ricciardi, 2014). Majority of the capital

expenditures in a firm are proposed by the Plant Managers and then directed towards the

Financial Managers for further approval. The financial budgets of firms also denote the strategic

plans the firm makes and these are finalized by the senior management of the firm. Whenever a

firm has clear and real competitive advantage, it is proven by the positive value of Net Present

Value of a given project (Firer, 2012). It is the responsibility of finance managers to indulge in

efficient long-term financial planning and devise strategic plans identifying the business

opportunities that provide maximum benefit and profitability for the firm. Corporate finance

involves managing the required finances and its sources. Its objective is to maximize the

shareholder’s value for the short and long term.

LONG-TERM FINANCIAL PLANNING 3

References

Baker, H. K., & Ricciardi, V. (2014). Investor behavior: The psychology of financial planning

and investing. John Wiley & Sons.

Firer, C. (2012). Fundamentals of corporate finance. McGraw-Hill Higher Education.