The financial decision is a process that is responsible for all the decisions related with to liabilities and stockholder’s equity of the company as well as the issuance of bonds. These decisions are concerned with long-term assets. These assets are helpful in production. Profit is earned by selling the goods so produced. It can, therefore, be said that the more correct these decisions are, the greater will be the growth of the business in the long run. In addition to that, these affect the future possibilities of the business.
To make a good financial planning process we have to follow several steps. First, we have to determine the current financial situation of the company, establishing financial goals, identifying different courses of action. Following this, we also need to focus on evaluating alternatives, elaborate and implement the actions of the financial plan at the same time while reviewing and revising it. All these lead to creating an impactful plan which proves to be very beneficial in our further endeavours.
Financial decisions are made by completing various stages. The first is to create a spending plan and budget. As we must know how much we are going to spend so that we can plan it in a very efficient manner. Secondly, we should be prepared for the future and therefore, we must have saving goals. Our decision must be according to the present economic condition as it can affect everything to a great extent. We must revise everything before taking a major decision. Also, we must pay off debts and try to stay out of it. These are some of the steps that will convert a financial decision into a successful one with proper execution.
Jayant Kale, who brought his financial expertise to Northeastern University, said “I started understanding the underlying economics of these financial decisions,” Therefore, he pivoted toward finance for his doctoral work. “I was intrigued by how decisions are made when different people have different information. All of it is studied in a rational way because you must look at it within very specific axioms.” Therefore, to make successful financial decisions, we must feel the inner depth of each and every element.
Saloni Sharma