The Purpose of the Financial Policy Essay Example | Topics and Well Written Essays - 1000 words - 21

The Purpose of the Financial Policy - Essay Example Coming to the month of May, the expenses go much down, making the net income to increase, hence an increase in the profit. This shows that the month was not much over-budgeted. On the month of June, the net expenses and deductions increase again drastically. This reduces the net income, in the same way, hence making the net profit be reduced. Even though the company does not realize a loss this month, the profit it gets is so much reduced when compared to the previous month.  Financial policy is criteria or procedure that describes a company’s choices as far as debt/ equity mix, currencies of denomination, maturity structure, the method of financing investment projects, and hedging decisions with a goal of maximizing the value of the firm to a particular group of stockholders.  The purpose of the financial policy is to minimize cost over a long period of time, providing citizens, investors and business owners with confidence when they know that there are strong, and consis tent financial policies in place to guide their businesses.  The benefits of a financial policy include the fact that the stakeholders are guided by certain rules and regulations, hence the gain of confidence in the business over a long period of time. It also enables people to receive payment at the time of service. The financial policy allows one to gain control over a financial system, this enables one to offer financial services to patients while minimizing possible confusions.