Even if there is some surplus money, good financial planning would put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost. (ii) To ensure unneccessary finance is not raised Excess funding is almost as bad as inadequate funding. Financial planning also tries to specify possible sources of these funds. Apart from this, there is a need to estimate the time at which these funds are to be made available. (i) To ensure availability of funds whenever these are required This includes a proper estimation of the funds required for different purpose such as for the purchase of long-term assets or to meet day-to-day expenses of business, etc. Financial planning strives to achieve the following two objectives Explain the twin objectives of financial planning in the light of this statement.(HOTS Ali India 2010,2009 Delhi 2009)Īns. $uch type of wastages can be avoided through financial planning.Ģ.’ Financial planning is a financial blue print of an organisation’ s future operations’. This arises due to the complex nature of business operations such as, excessively over or under estimation of finance for a particular business operation. (iii) Helps in avoiding wastage of finance In the absence of financial planning, wastage of financial resources may take place. (ii) Helps in coordination It helps in coordinating various business activities, such as sales, purchase, – production, finance, etc. Hence, it helps in avoiding business shocks and surprises. (i) Helps in avoiding business shocks and surprises Proper provision regarding shortage or surplus of funds is made by anticipating future receipts and payments. The objective of financial planning is to ensure that enough funds are available at right time.įinancial planning is essential in financial management because: (Any two) It involves the preparation of a financial blue print of an organisation’s future operations. It is the process of estimating the fund requirements of business and specifying the sources of funds. Financial planning is the preparation of financial blueprint, which foresees entire fund requirement in respect to quantum as well as the timing. What do you understand by the term financial planning? Describe why financial planning is essential in financial management? (All India 2009)Īns. Why is it important? Give any two reasons. Explain the importance of financial planning in the light of this statement.(HOTS Delhi 2010 C, 2008 All India 2009)Įxplain the meaning of financial planning. ‘Financial planning tries to link the present with the future’. (Compartment 2014 All India 2012 Delhi 2012) Previous Year Examinations Questions 3 Marks Questionsġ.What is meant by financial planning? State any two points of importance of financial planning. (ii)To ensure unnecessary finance is not raised. (i)To ensure availability of funds whenever required. (ix)Helps in proper utilisation of funds. (viii) Helps in avoiding wastage of finance. (vi)Provides a link between investment and financing decisions. (iv)Helps in linking present with the future. (iii)Helps in coordinating various business functions. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.(i)Helps in forecasting alternative business plans. There are no guarantees that working with an adviser will yield positive returns. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). All investing involves risk, including loss of principal. This is not an offer to buy or sell any security or interest. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. Securities and Exchange Commission as an investment adviser. SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S.
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