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Strategic financial planning: a balance sheet perspective
Hospital & Health Services Administration
|January 10, 1987
Summary
This study simplifies strategic financial planning using a balance sheet approach. It focuses on asset, debt, and equity policies for easier understanding by management and boards.
Area of Science:
- Business Administration
- Financial Management
- Strategic Planning
Background:
- Traditional financial planning often involves complex assumptions and projections.
- Funds flow approaches can be difficult for non-financial stakeholders to comprehend.
- Effective strategic financial planning is crucial for organizational success.
Purpose of the Study:
- To present a simplified, easily understood approach to strategic financial planning.
- To highlight the importance of key policy decisions in financial planning.
- To offer a practical tool for boards and top management.
Main Methods:
- Utilizes a balance sheet approach to financial planning.
- Focuses on three core business policy decisions: asset growth rates, debt policy, and equity growth policy.
- Defines a financial plan as the link between two balance sheets.
Main Results:
- The balance sheet approach simplifies the strategic financial planning process.
- This method avoids the complexities of numerous assumptions and projections found in funds flow methods.
- The approach is more accessible for understanding and use by boards and top management.
Conclusions:
- A balance sheet framework offers a more comprehensible method for strategic financial planning.
- Key policy decisions regarding assets, debt, and equity are central to effective financial planning.
- Simplified financial planning tools enhance strategic decision-making for leadership.