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24 октября 2026 г. — Transcript

by Sofia Tokareva · 5,588 words · 845 segments · language en · Watch on YouTube

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0:01Welcome to lesson five of corporate
0:04finance. In this class, we're going to
0:06be covering
0:09everything about long-term financial
0:12planning and growth for business
0:13sustainability.
0:15It's extremely important that you have
0:18the awareness as a corporate finance
0:20manager of the importance of long-term
0:24in finance. Okay, we're talking about
0:26finance planning and growth, but in
0:29finance, the concept of long-term is
0:32extremely important because it's where
0:34you allocate the resources and the pro
0:38the the situation with long-term
0:40planning and every time that you
0:42allocate any resources in the long term,
0:45it represents capital, a substantial
0:49amount of capital that you are
0:50investing. Plus the most uh challenging
0:54part of this is that uh when you
0:57allocate capital in the long term it's
0:59extremely difficult to move. Okay, if
1:02you want to change your plan that's why
1:03you have to think it very well and too
1:05much. So whenever you are planning to
1:07allocate some capital in the long term,
1:10just try to make sure that the capital
1:12investment or the budgeting calculation
1:14that you're doing is the right one
1:16because changing from that particular
1:19decision to a decision to another
1:21decision. Let's say that you want to buy
1:23an asset, you want to buy a building,
1:25and then you decided not to buy the
1:27building, but to buy uh an office space,
1:30or let's say that you decided to uh
1:32build or expand your uh floor sales uh
1:37like you are a business and you want to
1:38have more uh stores open and then
1:41suddenly you decided not to but you want
1:44to go online. Whenever you make those
1:46decisions, those decision cost money.
1:48Those decisions are long-term and you
1:50have to be very aware and this is part
1:53of the importance. Okay, we're going to
1:55see the concepts of sustainable internal
1:57growth rate and we are uh going to check
2:01on the considerations for building a
2:04business long-term financial planning.
2:06Okay.
2:08So the a financial decision refers to
2:12decision concerning financial matters of
2:15a business concern. Decisions regarding
2:18the scope and magnitude of funds to be
2:21invested to enable a parent to
2:23accomplish any goal or the goal that
2:26they are planning to do. The kind of
2:28asset that you want to be acquired. Do
2:29you want to be you want to acquire a
2:31building? Do you want to acquire a land?
2:34you want to acquire an office space or
2:36any other asset. It could be it could be
2:39a security. Okay. Um um pattern of
2:44capitalization, pattern of distribution
2:46of f of firms income and similar other
2:49matters. It's extremely important that
2:52those decisions are decisions that are
2:54very heavily impacted and the um the
2:58matter of this is not the impact in
3:00terms of capital only because the
3:02difficulty to change back those
3:06decisions that's why you have to make
3:07sure that if that decision you're taking
3:09at a particular time it's a decision
3:12that you took all the considerations to
3:14make it. So long-term financial planning
3:17combines financial forecasting. We don't
3:19guess here in finance probably will take
3:22a little bit of um what we call
3:25intuition but b all of the financial
3:29planning and financial um financial uh
3:32matters decisions are based on
3:34forecasting. Okay forecasting with
3:37strategy it's a collaborative process
3:40because you have to count on all the
3:43areas. So if you are a manager, a
3:46corporate finance manager, probably you
3:48want to take account, you want to take
3:49into consideration the legal department,
3:52you want to take into consideration the
3:53engineering department, you want to take
3:55into the accounting department, all the
3:57department. That's why it's
3:58collaborative. Okay? So they will have a
4:01different scope and we will have
4:03different mindsets to set the possible
4:05scenarios that we will have. What
4:08scenarios are we going to have in the
4:10next year, in the next five years, in
4:12the next 10 years? When you have
4:13multiddisciplinary teams, they will come
4:16up with a better solution. Different
4:18mindsets, different interest, and
4:20different way of viewing the future.
4:23Okay? And of course, it helps business
4:25to navigate through challenges, which is
4:27the most important challenges. We're
4:29going to face it all the time. We we're
4:31not um we shouldn't be uh afraid or
4:37scared about challenges what they come
4:39because they come all the time. The most
4:41important part is you to be prepared.
4:44They don't get you by surprise that you
4:47expect them and if you expect them you
4:49know how to act and that's the planning
4:51is so important in here. So if with that
4:54you must have that included in your
4:58business strategic plan. I really
5:01encourage all the students for the
5:03business that they are uh evaluating for
5:08the final or the sumitative um
5:10sumitative assessment the group
5:12assessment or the individual check on
5:14the business that you are researching
5:17the strategic plan. Usually it's not
5:20very well detailed because it's a
5:21strategy and who wants to develop an
5:24exposure the strategy but they will give
5:26you a few um a few uh hints like for
5:31instance a Starbucks uh strategic plan
5:34is to uh expand and develop the
5:38experience on the clients in the floor
5:40of their shops. Okay. So they really put
5:44a lot of effort, resources and planning
5:47and most of the uh of the resources go
5:49to having the the customer the great
5:52experience having a coffee in one of
5:54their shops. Okay. Try to um try to um
5:59expand your knowledge in here. Try to
6:01see what the strategic plan is and see
6:03how the long-term concept copes in
6:06there. Okay. So financial planners is a
6:08plus of aligning the business financial
6:11capacity. the financial capacity it's or
6:14the expected capacity because you can
6:16have a capacity today and maybe next
6:19year because of some decisions that
6:21you're taking it could be bigger
6:24hopefully or can be smaller because you
6:26want to be more efficient. It would
6:28depends on the strategy at this point.
6:30Whatever decision big or small the most
6:33important part is that you expect the
6:35particular size. Okay. And it has to be
6:37aligned the long-term objective which is
6:40the business strategy with the financial
6:42capacity plan. You have to adjust that.
6:45If you is there is a mismatch there you
6:48will have if you don't have enough
6:50financial resources to um to cover your
6:54strategic plan that's going to be
6:56trouble because you're not going to be
6:58able to execute what you're planning to
7:00do in order to grow. And on the other
7:03hand, if you have the resources but not
7:05the planning, then you will have idle
7:07resources which means you're losing time
7:10and you're losing money. Okay. The main
7:12objective of financial planning and I
7:13want you to open your mind regarding
7:16this because we talked now about health
7:19financial health of the business how the
7:22business how can you assess the business
7:24the corporate finance manager we we have
7:26covered all of those term. But in
7:28finance, the concept of long short-term
7:32planning is good. It's something really
7:33good. But short-term planning, you can
7:35change it really fast. Okay? The impact
7:37in the company is not that matter that
7:41big. But in the long term, you have to
7:43make sure that you know exactly where
7:45you're going or at least you have a very
7:47good sense of where you're going.
7:48Because the main objective of financial
7:51planning is that sufficient funds should
7:53be available in the company for the
7:56different purposes that you have decided
7:58for the company to be like if you want
8:00to buy a building, [snorts] you must
8:03have the cash flow to buy that
8:05particular business. Especially if you
8:07want to finance that. Okay. of you want
8:10to meet your day-to-day expenses. In
8:13other words, it ensures timely
8:17available resources especially financial
8:21resources which is that we're talking
8:23about uh to meet whatever the
8:25expectations are.
8:28So the
8:30financial decisions also refers to
8:32decision concerning financial matters of
8:35a business regarding the magnitude of
8:37funds to be invested to enable a field
8:41to accomplish their ultimate goal. The
8:45ultimate goal is where do they want to
8:47be? Strategic plan. Where do you want to
8:50be in order to expand your business in
8:53order to sustain your business over
8:55time? the kind of assets to be acquired.
8:59Probably if you are in the manu car
9:00manufacturing business, you are not
9:02going to spend money in diesel uh and
9:05diesel uh features for cars. Probably
9:08you're going to spend it in electric or
9:10something echofriendly pattern of
9:12capitalization, distribution of firm
9:14income among among others. So launch of
9:17financial planning combines forecasting
9:20with the strategy. Okay, as we say it's
9:23a very highly collaborative process and
9:26the most important part in planning is
9:29to anticipate all the possible future
9:33scenarios. So whenever though one of
9:35those scenarios shows up in a particular
9:38moment then you have all the way plan
9:42and the planning to execute in order to
9:45achieve the goal because you as a
9:47finance manager you don't take excuses
9:50and they don't take excuses for you. You
9:52have to plan ahead forecast understand
9:55what to do it and try to prepare with
9:58all the possible scenario. There are
9:59some scenarios of course that you cannot
10:02anticipate like for instance the COVID
10:0419. Um you cannot anticipate September
10:0811 for some of the fin or or the
10:10financial service industry um crisis in
10:142008 in the United States and in 2007 in
10:19Europe. So those are the uh things that
10:22you could not anticipate way in advance.
10:25for those things. Of course, it's
10:28extremely rare to have it. But uh for
10:32most of the time, you have to understand
10:36what are the challenges that the
10:38business is going to face in the future.
10:41And what we mean by the future is not
10:43next year or not two years from now.
10:46It's at least from five to 10 years. So
10:49you can navigate through those
10:50challenges and take it and you cannot
10:55dev deviate you cannot take away or go
10:58on the side of what it's planned for the
11:01business because your plan is one. Okay,
11:04you have one strategy and that strategy
11:07has to survive no matter what. Okay. So,
11:10long-term financial plan is you align
11:13the business financial capacity or
11:15expected capacity with long-term
11:17objective or strategy.
11:20So, um
11:22in order for businesses
11:26uh to be competitive,
11:28they must tailor a long-term sustain
11:34sustainable strategy. Like for instance
11:37applying a prudent and integrated
11:41financial planning approach that
11:43identifies and manages risk of the
11:47business long-term health and credit
11:50rates. It's extremely important that you
11:54identify and not only identify you
11:57anticipate identify anticipate and
12:00manage the risk
12:03and what kind type of risk will your
12:05business face in the long term. Okay?
12:08You don't want to you don't want to risk
12:10your health and you don't want to risk
12:12your credit rating. The business credit
12:15rating revi it's a a term that it's used
12:20to beat
12:22businesses h in the public they are
12:25rated they are rated by independent
12:27credit rating agencies like standard and
12:31poor or fish they give the businesses a
12:34grade depending on different things okay
12:37and that that grade is called credit
12:40rating and credit rating is a highly
12:43reputable
12:44grade that these particular businesses
12:47have. You want to maintain your credit
12:50rating. Okay. Um the long-term financial
12:53planning, the long-term as we mentioned
12:55it involves more it's more uncertain
12:58than the short run because in the short
13:00term you can make changes really quick.
13:03The impact are very low and you can
13:06anticipate and maneuver but in the long
13:08term you cannot. Okay? So when you have
13:11uncertainty in the long term, you have
13:14additional risk there. Okay? Additional
13:17risk to project and the decisions that
13:19are involved in that particular um in
13:23that particular project. Okay. How would
13:27you like to approach your survival or
13:30your business survival with your
13:32competitors?
13:34That's something that you have to
13:36analyze and put it in a piece of paper
13:38in your strategic plan, in your
13:40transformational strategy, in your
13:43operational strategy. You have to put it
13:45there, understand what to do. But no
13:48matter what, you have to survive and you
13:52have to stay outstanding to your
13:54competition. Think about businesses like
13:57Amazon. They are constantly growing.
14:01Think about businesses like Netflix.
14:04Think about businesses like Apple that
14:06they are constantly innovated. Think
14:09about businesses like um like uh
14:14I could think about maybe Tesla. Okay,
14:18they are always innovating about their
14:21cars. Okay. Uh big businesses,
14:24businesses that stand out in the in the
14:27in the market. Nintendo they are always
14:31innovating. Sony always innovated to be
14:34sustainable and then to survive among
14:37the competitors because the competition
14:39is coming really strong.
14:43So the finance manager has to exercise
14:47prudence and all of the skills whenever
14:51they are taking long-term financial
14:54decisions because whatever decision they
14:56take if they take it without prudence
14:58and without any other assessment of what
15:02the pros and the cons are they will
15:05affect the financial health of the
15:07enterprise over a long term. So bad
15:11decisions making without judgment,
15:14without a complete assessment could
15:17impact the business long term. Okay? If
15:20you buy an asset that it's being costly
15:23and you're not going to be using that's
15:25going to impact your cash flow and
15:27you're not going to be able to use that
15:29particular money to do something else
15:31because it's compromised to a particular
15:33debt. Okay. So some of the things that
15:37um that I want you to consider in here
15:40is the factors that managers have to
15:43face and the first um uh factor is the
15:46external factor. External factors
15:48whenever you have a business you have to
15:50consider them. There are environmental
15:52factors that are not in control of the
15:56manager. Okay? like the economy, the
15:59phase, the the cycle, the business cycle
16:02or the cycle that the economy is seeing,
16:05uh how the capital markets are
16:07structured, are they developed and they
16:09are underdeveloped, they're regulatory,
16:12are they heavily regulated or not? Okay,
16:15regarding everything that it comes to
16:18here uh investor expectations in terms
16:21of safety, liquidity, profitability or
16:24lending policies or financial
16:26institution and other
16:29uh factors whenever they make decision
16:31that the financial manager has to make
16:34is the internal factors. They are
16:36related to the internal conditions of
16:38the firm. What's the purpose of the
16:41firm? What's the nature, the age of the
16:43firm? The older the firm it's supposed
16:47to have more experience. Okay. So just
16:49to make sure that if you're a new
16:51business probably you will have to make
16:54some consideration if you are a startup.
16:56Okay. The ownership the asset structure
16:59the liquidity position. Do you have
17:01enough cash to cover your cash flow if
17:04you are a new business? Where are you
17:07how are you going to finance that? The
17:09expected return the recent cost. the
17:12attitude of madame all of that are
17:15internal factors that you can certainly
17:18some of them are shortterm some of them
17:19are long term but they are in control of
17:22the business okay it's extremely
17:24important that you can take into
17:26consideration when making a planning a
17:28sensible and sensitive and a very um
17:33open-minded plan and very realistic plan
17:36challenge but realistic because you have
17:38to take into cons into consideration the
17:40external and the internal Usually in the
17:42external factors you can go with
17:45resources and tools like the SW
17:47analysis. There are great analysis to
17:51make assessment of what it's outside and
17:53in the internal factors probably you
17:55will take an an um some other tools like
18:00the Brio which uh tells you this is for
18:04strategy right that tells you if you pro
18:06if your if your business has a
18:09competitive advantage in terms of uh uh
18:13innovation rarity creates value and
18:16things like that. So try to make sure
18:18that you do a great assessment of where
18:20you are and from there you start
18:22planning in the long term base and
18:25adjust to the resources financial
18:27resources that you have available.
18:33So uh long-term financial planning
18:36provides tools and information that will
18:41help management
18:43taking decisions regarding taking
18:47decisions and anticipate. Remember that
18:49the the situation here we're not here
18:52executors of situations. We are not
18:56operational here. We are strategy
18:59people. We are people that we have to
19:01anticipate and try to anticipate all the
19:04matters that it can come all the
19:06situations that can appear. Of course,
19:08we are not um we don't have magic in our
19:11hands and we are not 100% certain but
19:15that's why we have a multicultural and
19:17multitask team. So we can all have a
19:20very nice brainstorming and come up with
19:22a very nice solution. Okay. So in here
19:26we could understand exactly what are the
19:28capital requirements for the projects
19:31that we want to uh build in order to be
19:34sustainable and when we talk sustainable
19:36is economic sustainable. We will set
19:39exercise to invest to invest in the
19:42right projects the right projects that
19:44are aligned with our strategy and of
19:47course our strategy has to be very much
19:49aligned with what the market is
19:51demanding. And if the market is not
19:53demanding, we can create a particular
19:56need for that market. But for that, it's
20:00some resources that we have to make some
20:02extra thinking. It provide managers
20:04resources to come with the right capital
20:06mix. Okay, it's extremely important. We
20:09will see a full chapter about capital
20:11structure. Uh if whether we're going to
20:13use bonds, equity, loans, retain
20:15earnings and help to prevent or
20:18anticipate future challenges. extremely
20:20important that you understand that this
20:22is a the core part. You can do all the
20:25calculations that you want but the most
20:27important part is that when you do the
20:29calculations is to understand why are
20:32you deviate from your core or from your
20:36particular strategy. If you are deviate
20:38something in here did not go well and
20:41this is something that you have to
20:42analyze. So the efficient use of the
20:44financial resources mean more resources
20:47to other investments are available to
20:49increase the value of the business
20:51because do not lose the sense of this
20:54course. This is a course that we are
20:56oriented in forprofit business and
20:59whatever we do as a corporate finance
21:02manager is to create value for the
21:05stockholders. That's that's our main
21:07purpose. Create value. And by creating
21:10value means create value in terms of
21:13economic resources. If we want to create
21:15something that is not economic, at least
21:18something that it it would enhance our
21:20reputation like building school for poor
21:24communities. That's not going to give us
21:26a dollar in there, but reputationally it
21:29will work. So this is part of long-term
21:32financial planning for business. Of
21:34course, this is non-economical. This is
21:36more reputational, but this is part of
21:39the long-term financing and requires, of
21:41course, money. It requires resources and
21:45we have to anticipate and understand
21:48that we have to take the resources from
21:50our own pockets. Okay. So, we have two
21:54ways of understanding
21:57the the this type of growth. Okay. We
22:01have to grow no matter what. We have to
22:04grow in order to be sustainable,
22:06economically sustainable. If we stay
22:09stuck, we will die. The business will
22:11die. And this is something that we don't
22:13like. This is what happened to
22:15Blockbuster for instance in a particular
22:18term, a game bo game the game uh store,
22:23but especially Blockbuster. You remember
22:25Blockbuster was a video um a video store
22:29very successful in the United States and
22:33most of the country was a huge a very
22:36nice business they were pioneers in the
22:38market they were pioneers in the
22:40industry they were very innovative but
22:43you know what happened they stuck with
22:44the business model they didn't evolve
22:47okay so we have to grow and this is the
22:50most important part whenever you analyze
22:52a business okay when you analyze the
22:54business you must understand that this
22:56business in their core has to have a
22:59particular way of thinking how are they
23:01going to grow okay if you don't if a
23:04business doesn't grow they're going to
23:05die and I just provide you with an
23:07example so we have two ways of uh
23:09calculating or getting funds for growing
23:13the first one is the internal growth
23:15rate and refers to growth rate growth
23:21being bigger that it supported only with
23:25internal resources, no external
23:28financing. Okay? They only take the
23:32retain earnings. So the net profits that
23:36the business did in the income
23:39statement. Remember the last line there
23:42is the net income. Part of that net
23:46income is given to stockholders in the
23:50form of dividends which is the profit
23:52and the other part is reinvested. That
23:55part reinvested it's retain earnings. So
23:59in the internal growth rate we are
24:01counting on our own resources. We are
24:04not talking on external financing. Okay.
24:07So a company maximum internal growth
24:10rate is the highest level of business
24:14operations that can continue to fund and
24:18grow the company. It's important for
24:21startups since it measures the ability
24:24of the company to increase sales and
24:27profit without issuing new stock or
24:32finding new investors. Okay, it's
24:35extremely important and most of you who
24:37I know they want to be entrepreneurs.
24:39It's extremely important that you know
24:41this that you this resources that you
24:44find had to come from internal finance
24:49from the owners of the particular um of
24:53the particular business. So internal
24:55growth can be generated by organic
24:58growth which is adding new product lines
25:01or expanding the existing one. But in
25:04any other way the formula it's a very
25:07simple formula which is return on asset
25:11times retention rate which is the
25:15retention rate that you have from from
25:18the dividends divided by 1 minus return
25:21on asset times the uh retention rate. So
25:25this is a a formula that depends on the
25:28expected or the return on assets. the uh
25:32retention rate and the difference
25:35between that. So the drivers on the
25:37external growth rates are the increase
25:41or decrease an increase in the retention
25:45rate. Okay, which is in here or a
25:49decrease in the dividend payout which is
25:52this. Okay, the dividend payout. So um
25:58they show how the company can use the
26:03resources for more efficient and
26:06effective use to generate internal
26:09growth. Like um some companies can use
26:13like manufacturing companies they can
26:15use their own resources in their own
26:18production progress to optimize
26:19machinery and labor hours. They can do
26:22labor hours for that. Okay. they can use
26:24that to boost productivity. So the
26:27internal growth rate it's growing with
26:30your own resources. You don't use
26:32external financing and the formula it's
26:36depends on retention rate and the
26:38dividend payout. How much are you from
26:40the earnings are you retaining for
26:43reinvesting and how much are you paying
26:45for payout ratio.
26:51So uh the sustainable uh we're coming up
26:53with a sustainable growth rate. It's the
26:56opposite. The sustainable growth rate is
27:00the rate of growth that can expect to
27:02see in the long term. It's an indicator
27:06of the what the company is in in what
27:09cycle is it is it the company. Uh the
27:13growth ratio is used by creditors to
27:16determine the likelihood of a company to
27:18default of his loan. The high growth
27:20rate might indicate that the company is
27:22focusing on research and development and
27:26net present value positive projects
27:28which might delay the repayment of debt.
27:31A high growth rate company is generally
27:33considered riskier and is likely to see
27:36greater earnings volatility from a
27:39period. Okay. So retention rate it's the
27:42sustainable um growth rate it's from
27:46externals. Okay. It's extremely
27:49important that it's from external and
27:52the formula it's sustain for sustainable
27:55growth rate it's retention rate times
27:58return on equity. It's extremely easy.
28:01Okay, we calculate the return on equity
28:03and the return the retention rate. It's
28:07one minus the dividends pay. Okay. In in
28:12one or the others, one minor the or the
28:14net income minus the dividend divided by
28:17the net income.
28:21So h for um
28:25what's the main difference? We we have
28:27it very clear but I want to put it in a
28:30very nice slide. The main difference
28:32between internal and sustainable globe
28:36grid are um
28:40uh are uh how are they going to uh get
28:45the financing? Is it going to get it
28:48from internal or for external? Okay. Uh
28:51are are they going to borrow or are they
28:55going to use their own fundings?
28:58uh external finances it's allowed but
29:01only in the proportion of current
29:04capital mix. The formula of sustainable
29:07growth rate is similar to the internal
29:09growth growth rate. The thing is that
29:12you don't use a return on asset but use
29:15return on equity. Okay.
29:17One assumes no external financing.
29:20sustainable assumes some external
29:24financing not to deteriorate the debt to
29:27equity ratio. So these are like kind of
29:30a exercises that you want to do with
29:32your firm. When you do long-term
29:34planning, uh long-term planning, think
29:37in long-term planning about uh making
29:40your firm sustainable over time, making
29:42a financial financial h financially um
29:49uh how do you say financially uh calm,
29:53clear, settled, stable. Okay? And for
29:57that you can grow your business. Okay?
30:00Because in order to be to you want to
30:03plan fine but you want to plan to grow
30:06you want to plan to stay still you know
30:08so you can plan with your own resources
30:11or with your external resources
30:14depending on what you want to do so
30:15depending on what the business objective
30:17is as I mentioned the news usually
30:19startups are more internal the ones that
30:22are businesses that are more
30:24consolidated are more traditional are
30:27more sustainable
30:31So uh we have here a small example okay
30:35we have example of big bow baby it's a
30:38retail store remember we have to put
30:40everything in context it was created in
30:42the 2017 and upper management is
30:45interesting in knowing the business
30:47sustainable growth rates for the past
30:49years so we have some selected financial
30:52data criteria that was provided by the
30:55CFO of the business okay We have the
30:58dividend per share. We have the number
31:00of common share outstanding. Uh we have
31:02the dividend payout, the net income, the
31:05retention rate. And then we have some
31:08information here to calculate the
31:10sustainable growth rates. Okay. So when
31:13we want to understand from 2017 through
31:1620 uh 20 when we do the calculator based
31:20on the formula that we show you we say
31:22that the sustainable growth rate it's
31:2510% in 2007
31:289% 8% and again 10% in 2020. So when we
31:34get uh when we want to make an a small
31:38assessment and it's a generalization
31:40from the perspective of internal um from
31:44internal manager point of view I would
31:46say that the business more or less has a
31:50sustainable growth rate from nine to
31:5410%. Okay, year over year. This is the
31:57way that they calculate it. Okay, you
31:59have the information how to calculate in
32:02the in the past slide. You can try and
32:05do the exercises. Okay, so to further
32:08understand the health of a business, uh
32:10the sustainable growth rate should be
32:13compared with the number of companies
32:15that operate in the same industry. I as
32:18we mentioned in the interest ratios in
32:20the few lessons back there's nothing
32:23this information tells you that the
32:26business is consistent and is constant
32:29but it doesn't say anything that let's
32:32say in 2010 the business uh uh the
32:36retail business grew 20% and you only
32:39grew as a business 10%. Why businesses,
32:43why investors want to put money on you
32:44if they have better returns in another
32:46place. Okay, some of the film in the
32:49interest see ratios that are lower than
32:53uh the big bow baby. Okay, the business
32:56is growing quickly and outperforming its
32:59competitors. Just check on that. Okay.
33:02Uh check on that. Okay. Uh so sometimes
33:06um
33:08uh sometimes you have to see that uh
33:13probably do you want to make sure that
33:15the business it's um it's a it's a
33:18business that it's comparable to some of
33:21the business of their particular or some
33:25of the business of their particular
33:26field. Okay, understand this concept.
33:30Okay.
33:34So, how what are the considerations when
33:36you want to build a long-term plan?
33:38Okay. When you want to build a long-term
33:40plan, you have to understand the total
33:43capital requirements. How much money are
33:45you going to be needing,
33:47you're have to make a very nice
33:49assessment of the type of project where
33:51you want to put the money in. Okay? And
33:54where you want to put the money has to
33:56be perfectly aligned with your business.
33:58If you are in the hospitality business
34:01pro most likely you're not going to
34:03spend in a electric plan okay business
34:07you'll have to sp spend something that
34:09is regarding to the business it has to
34:12come with the resources of managers to
34:15come with the right capitals bond equity
34:18bond loan or retainer so the efficient
34:21use of uh financial resources mean more
34:25resources to other investments to
34:27increase the value of the business
34:29shares and help to prevent or anticipate
34:33future challenge. It's extremely
34:34important that we do a very nice
34:37thinking before executing anything.
34:42Some of the
34:44uh the considerations that long-term
34:46plan should include it's the time
34:48horizon is more than a year. It's
34:50between five and 10. There are some
34:52industry that require more than 10
34:54years. Those are that are capital
34:56intensive like uh oil exploration they
34:59have a very longer timeline the
35:02dimension okay the scope that you're
35:04going to be using okay and the
35:05appropriate funds that you're going to
35:06be using control and monitor you want to
35:09control and monitor that plan okay you
35:11need to make sure that the plan is not
35:13deviated from the original plan and if
35:17it's deviate deviated you want to make
35:19sure that it corrects in the short term
35:22okay do not leave it longer longer than
35:24that. So you have to do the internal and
35:26external analysis of the financial
35:28environment out there where who are you
35:31are competing with? What are you facing
35:32internally? Do you have the resources?
35:35Is borrowing a lot? Is borrowing
35:37expensive? Is borrowing cheap? It's uh
35:41how is the the the
35:44financial environment is are we in a
35:46contraction in an expansionary period?
35:48How we are how we going to operate and
35:50based on that you make the planning
35:52decisions. Okay. is debt affordable.
35:56Okay, it's more equity affordable and
35:58you decide do you want to have uh that
36:02particular those particular planning uh
36:06in in height. No, you want to give them
36:08visibility. Okay, you want to show
36:10people where you are internally. Okay,
36:14you don't want to show your strategy to
36:16competitors because you don't want
36:17people to compete with your strategy
36:19with all your resources. But you want to
36:22give the stakeholder certain visibility
36:24and you want to know where you find that
36:26visibility in the annual report. So
36:28whenever you do the sumitative
36:30assessments just check and take a look
36:32of the annual report. Think about the
36:34business that you want to develop and
36:35from there we will see how it goes and
36:39exactly in details where the funds are
36:41going to go. The planning should say
36:43where the funds are going to go, how
36:45much are they going to cost, where they
36:46are, where they apply, and if they were
36:50not spent, why were they not spent in
36:53full? Because you don't want to you
36:55don't want to have mistakes h under
36:57budget. You don't want to go have
36:59mistakes over budget, but you want to
37:01make sure that whatever you allocate,
37:04you spend it. Okay. So um from
37:09from the perspective uh these are the
37:12two terms of course the financial
37:13planning is a it's a extremely important
37:17task for a financial manager. There are
37:19some considerations that they're going
37:21to have. I explained you some of the
37:22impacts that happens if the um financial
37:27manager does not take the right
37:28considerations or the right assessment
37:31whenever they make decisions and for
37:33that they have to think of uh growing.
37:37Okay. Whatever plan they do they have to
37:39make they have to expand. You can
37:41expand. A business can expand in so in
37:43many ways. They can expand by acquiring
37:46new businesses, by expanding the line of
37:49businesses, by developing new products,
37:52by uh buying new products and
37:55incorporated by merger. They can expand
37:58many ways, but the way that they want to
37:59expand is fine. It doesn't matter. They
38:02have to grow. Business have to grow for
38:04sustainability. And you can do that by
38:07using your own resources by calculating
38:10this the internal growth rate or using
38:13your sustainable growth rate by asking
38:15for external resources
38:18um um the um external resources that you
38:24want to uh incorporate in your business.
38:27Okay. So from here, I want you to open
38:29your mind, expand your mind, think big,
38:32look the business from 10,000 miles up,
38:36look down, and from there start planning
38:39and making decisions for your own
38:41business.

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