A financial strategy refers to a business or individuals approach to managing and using financial resources to achieve goals. It involves planning and decision-making related to investment, budgeting, fundraising, cost management, forecasting future financial scenarios, and managing financial risks. The main objectives of a financial strategy are typically to increase shareholder value, secure the Companys financial stability, and ensure the availability of funds for future growth or to deal with unpredicted situations .
There are different types of financial models that can be used to help develop a financial strategy. Some of the most common models include the three-statement model, discounted cash flow (DCF) model, merger model (M&A), initial public offering (IPO) model, leveraged buyout (LBO) model, sum of the parts model, consolidation model, and budget model .
Here is an example of a hypothetical financial strategy for a tech start-up: The start-up sets a goal to develop and launch a new product within two years. To do so, it decides to invest heavily in research and development .