Professional Documents
Culture Documents
OBJECTIVES TO
ORGANIZATIONAL STRATEGY
AND OBJECTIVES
CHAPTER 2
Discuss the importance of objective setting in a business
enterprise.
Describe the primary financial objectives of a business
firm.
Explain the responsibilities of a Finance Manager to
achieve the firm’s financial objectives
Understand the nature of environmental (“green”) policies
and their implications for the management of the economy
and the firm.
STRATEGIC FINANCIAL MANAGEMENT
The owner’s perspective which holds that the only appropriate goal is to maximize
shareholder or owner’s wealth
Investing
Asset mix – refers to the amount of pesos invested in current and fixed assets
The investment decisions should aim at investments in assets only when they
are expected to earn a return greater than a minimum acceptable return
which is also called as hurdle rate.
Investing decisions:
This calls for good knowledge of costs of raising funds, procedures in hedging
risk, different financial instruments and obligation attached to them.
In fund raising decisions, the finance manager should keep in view how and
where to raise money, determination of the debt-equity mix, impact of
interest, and inflation rates on the firm.
Financing decisions:
Ensures that the firm has sufficient resources to continue its operations and
avoid costly interruptions. This also involves receipts and disbursements.
Operating decisions:
a. The level of cash, securities and inventory that should be kept on hand
b. The credit policy
c. Source of short-term financing
d. Financing purchases of goods
Environmental (“green”) policies and their implications
for the management of the economy and the firm.