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Charlie Munger

Strategic Financial Planning


Strategic financial planning is a bit different from standard financial planning because standard financial planning focuses on a budget which is detailed estimation of financial statements when strategic financial planning is more focused on return and solvency analysis over long-term period. 


Usually strategic financial planning is a part of strategic planning. Every strategic plan should include main financial indicators over planned period. Normally strategic plan includes a period of 2-5 years depending on the business because some businesses are more predictable (as telecoms or utilities) while others are very difficult to forecast (as real estate development). 


Normal strategic financial planning should determine such financial indicators for future years:

  • Market share of the company for every segment
  • Revenue of the company by segments
  • Profitability of every segment
  • EBITDA (earnings before interest taxes depreciation and amortization)
  • WACC (weighted average capital cost)


Strategic financial planning is not only about predicting mentioned financial indicators but also about integrating those financial ratios in to the whole strategic plan. 


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