Financial Strategy

FINANCIAL STRATEGY

Financial Strategy examines the financial implications of corporate and business level strategies options and identifies the best financial course of action. It attempts usually to maximize the financial strategies adopted by a company or a business unit. The Financial strategies may be:

• Achieving the desired debt to equity ratio and relying on internal long term financing (via) cash flow, (Equity financing is preferred for related diversification and debt financing for unrelated diversification)
• Leveraged buy out (LBO) – a company is acquired in a transaction, which is namely financed by funds arranged from a third party such as a bank of financial institutions. This firm declines because of inflated expectation , utilization of all stock, management burn out and a lack of strategic management and
• Management of dividends to shareholders.
• Establishing a tracking stock – followed by large established corporations. A tracking stock is a type of common stock tied to one portion of a corporations business. It is actually an equity interest, in the parent company. Eg: At & T.