Relationship of Financing

Objectives to Organizational
Strategy
and
Other Organizational
Objectives

Learning Objectives
1.

2.

3.

4.

Discuss the importance of objective setting

in business enterprise.
Describe the primary financial objectives of
a business firm.
Explain the responsibilities of a Finance
Manager to achieve the firms financial
objectives
Understand the nature of environmental
(green) policies and their implications for
the management of economy and firm

Strategic Financial
Management
Strategic Planning

Long range and focuses on the

organization as a whole

Strategic Financial Planning

Involves Financial planning,

financial forecasting, provision of
finance,
It would lead to firms failure or
success.

Strategic Financial Planning

Allows

the firm in overcoming its

weaknesses,
Enables the firm to maximize the
utilization of its competencies
To direct the prospective business
opportunities and treats to its
advantage.

Short and Medium-Term

Financial Objective
Maximization

of return on capital
employed or return on investment
Growth in earnings per share and
price/earnings ratio
Minimization of finance charges
Efficient procurement and utilization
of funds

Long- Term Financial

Objective
Growth

in the market value of the

equity shares through maximization
of the firms market share and
sustained growth in dividend to
shareholders

Survival

firm

and sustained growth of the

Competing Viewpoints
Owners

Perspective

o Maximize shareholder or owners

wealth
Stakeholders

Perspective

o Emphasizes social responsibility

over profitability

Responsibilities to Achieve the

Financial Objectives
Investing

How scarce resources or funds are

committed to projects?

Financing
How the firm obtains and manages the
financing it needs to support its
investment?

Operating

How to manage firms working capital?

Environmental Green
Policies
Private

Property Rights
Government Regulation