Introduction to Long Term Financial Planning - Essay Example

 According to the latest financial statements, Nike Inc. has a long-term objective of achieving a single-digit growth in its revenue base. The company has been recording minimal performances in recent times and the management team resolved on improving its revenue base. Long-term financial goals play an important role in ensuring that the company achieves a single-digit growth in its revenues for the next say ten to fifteen years (McKeown & Kerry, 2012). The goals will ensure that the company has adequate time to consolidate its resources in achieving its goal. Long-term financial goals offer the company adequate materials to change its factors of production and incorporate the changes in its financial planning.    

            The main financial strategy of Nike Inc is the accumulation of financial reserves. This ensures that the company finances its projects using its own savings and profits at a relatively lower cost. However, such projects may require huge financial outlays and the company may take a longer time in accumulating adequate finances. Long-term financial goals are important in the company’s financial planning process because they ensure that the company explores all the best possible options for accumulating adequate savings (Ross & Westerfield, 2006). For instance, may come up with saving twenty percent of the profits for fifteen years. The long-term goal ensures that the company achieves its financial goal efficiently because the company will have ample time to explore sources of financing and gather adequate finances at the lowest cost possible.    

            The majority of successful businesses have had to rely on long-term financial goals in achieving their success. This brings out the importance of long-term financial goals in influencing the decisions of the management of an organization (McKeown & Kerry, 2012). In the same way, long-term financial goals are important in ensuring that Nike Inc. achieves its overall financial objectives. The financial management team of Nike Inc. should consider increasing the company’s asset base. 

 

Read More