Structuring Corporate Financial Policy:
Diagnosis of Problems and Evaluation of Strategies
This case discusses the element of good process by which an analyst could proceed to assess the financial policy of a firm. It discusses the elements of good process and offers three basic stages in that proces: (1)description- the ability to describe a firm's financial policies, (2)diagnosis-one derives a „good“ financial structure by triangulating from benchmark perspectives and (3)prescription- action recommendations should spring from the insights ganied in description and diagnosis. Problem
First of all task is to understand the firm's current financial policy. The financial analysts and decision maker need to understand point things. Financial policy of firms in developed and developing countries differ greatly. Financial analysts generally focus on trends affecting a specific industry, geographical region, or type of product. A financial analyst’s education is very important in becoming a top level analyst. Because of the complexity and competitiveness of the financial world, financial analysts' compensation is very good. Policy is changes and they need educates over time. The problems arise when a patient will not follow the financial policy. Solution
The Elements of evry Financial Policy are: (1)Mix of classes of capital : mix may be analyzed through capitalizations ratios, debt-service coverage ratios, and the firm's sources-and-uses-of-funds statement.(2)Maturity structure of the firm's capital -describe the choices made about the maturity of outstanding securities is to be able to infer the judgements the firm made about its priorities,(3)Basis of the firm's coupon and dividend payments : basis addresses the firm's preference for fixed or floating rates of payment and is a useful tool in fathoming management's judgment regarding the future course of interest rates,(4) Currency - the global aspect of a firm's financial opportunities,...
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