A Model for Aggregate Financial Planning

Financial planning in the firm is a dynamic process requiring that a variety of liquidity, profitability, capital structure, growth and stability variables be simultaneously considered. In recent years widespread attention has been given the time-wise interdependencies involved, but the focus has been conceptual and not directed to yield an implementable model. In the present paper a workable, multi-stage planning model is developed by combining these developments in corporate finance with techniques from optimal systems control. The firm is viewed as attempting to optimize a multiple-objective criterion of time-dated variables involving both short-and long-term financial goals. Random elements are considered to be part of the process by which decisions affect the firm's financial state and an optimal decision strategy developed for an important first-approximation model. The paper concentrates on the general model structure and specific means for implementation; rigorous mathematical analysis is suppressed. An illustrative application is presented and potential uses discussed.

• 저널Management Science · 18(10) · B–555
• 토픽Economic theories and models · Economics and Econometrics
• DOI10.1287/mnsc.18.10.b555
• 저자Clement G. Krouse