Strategic Financial Management

AAA

DEFINITION of 'Strategic Financial Management '

Managing an organization's financial resources so as to achieve its business objectives and maximize its value. Strategic financial management involves a defined sequence of steps that encompasses the full range of a company's finances, from setting out objectives and identifying resources, analyzing data and making financial decisions, to tracking the variance between actual and budgeted results and identifying the reasons for this variance. The term "strategic" means that this approach to financial management has a long-term horizon.

INVESTOPEDIA EXPLAINS 'Strategic Financial Management '

At the most fundamental level, financial management is concerned with managing an organization's assets, liabilities, revenues, profitability and cash flow. Strategic financial management goes a step further in ensuring that the organization remains on track to attain its short-term and long-term goals, while maximizing value for its shareholders.


Strategic financial management also means that short-term goals may occasionally need to be sacrificed to meet longer-term objectives. A typical example is when a loss-making company trims its asset base through factory closures or headcount reduction in order to reduce operating expenses. While such actions have a detrimental effect on near-term results because of restructuring costs and other one-time items, it positions the company to achieve profitability in the longer term.

RELATED TERMS
  1. Managerial Accounting

    The process of identifying, measuring, analyzing, interpreting, ...
  2. Stakeholder

    A party that has an interest in an enterprise or project. The ...
  3. Best Practices

    A set of guidelines, ethics or ideas that represent the most ...
  4. Accounting Records

    All of the documentation and books involved in the preparation ...
  5. Corporate Governance

    The system of rules, practices and processes by which a company ...
  6. Financial Accounting

    The process of recording, summarizing and reporting the myriad ...
Related Articles
  1. The Challenging Role Of The Corporate ...
    Insurance

    The Challenging Role Of The Corporate ...

  2. Competitive Advantage Counts
    Active Trading

    Competitive Advantage Counts

  3. Business Grads, Land Your Dream Job
    Professionals

    Business Grads, Land Your Dream Job

  4. Executing A Swot Analysis
    Investing Basics

    Executing A Swot Analysis

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center