Billy Crafton, Based in San Diego, Financial Advisor to Investments Banking & Sports Management, Advises clients in Various area of investments, finance and sports management.

Financial Management Issues in Public Sector Organizations

The following are some examples of financial management issues in public understandings, according to Billy Crafton from San Diego:

• Inadequate preparation

Government agencies spend far too much money on both building and design. The main reason for this is a lack of good planning. This lack of appropriate preparation causes a significant drain of cash, resulting in a financial crisis.

• The input-output ratio is unfavourable.

Public sector enterprises are substantially over-capitalized, resulting in an unfavourable input-output ratio. Over-capitalization gets caused by insufficient planning, excessive building delays, and other factors.

• Capital costs

Currently, the cost of capital in public sector enterprises does not include raising various forms of income, and this cost gets not calculated at market pricing. As a result, the capital cost gets underestimated. As a result, prices get set unrealistically, and market trends get underestimated. Even estimating the magnitude of earnings and losses becomes challenging.

• The issue of pricing

Another issue that a public-sector company has is in determining the prices of the items it produces. As we all know, even reputable businesses can lose money if their pricing policies aren't sensible. Because they do not follow a consistent pricing strategy, India's public sector companies suffer significant financial difficulties.

• Surpluses a problem

Another issue in the banking sector is the declaration of surpluses. After subtracting operating expenditures, regular replacements, interest payments, and dividends, profits refer to the resources available after deducting working expenses, interest payments. However, it has not been viable to devise a strategy of disclosing surpluses in public sector enterprises. The government has not established any clear guidelines for public sector undertakings to follow in this respect.