Financial Planning

Financial Planning

Contents

1. Introduction to financial planning; 2 . Meaning of financial planning; 3. Definition of financial planning; 4. Meaning of Financial Plan; 5. Objectives of Financial Planning; 6. Essentials/Characteristics of a sound financial plan; 7. Considerations in formulating financial plan; 8. Steps in financial planning;

9. Financial Planning Process

Financial Planning

Introduction

• Every business unit whether it is an industrial establishment, a trading concern or a construction company needs funds for carrying on its activities successfully. It requires funds to acquire fixed assets like machines, equipment, furniture etc. and to purchase raw materials or finished goods, to pay its creditors, to meet its day-to-day expenses, and so on. In fact, availability of adequate finance is one of the most important factors for success in any business.

Financial Planning

Date

Meaning of Financial Planning

• Planning is a systematic way of deciding about and doing things in a purposeful manner. When this approach is applied exclusively for financial matter, it is termed as financial planning.

• Thus, financial planning involves:

1. Estimating the amount of capital to be raised;

2. Determining the pattern of financing i.e., deciding on the form and proportion of capital to be raised;

3. Formulating the financial policies and procedures for procurement, allocation and effective utilization of funds.

Financial Planning

Definition of financial planning

In simple words Financial Planning can be defined as "the process of estimating the capital required and determining it's composition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.

Meaning of Financial Plan

A financial plan is a statement estimating the amount of capital requirements and determining its composition.

It emphasizes on the following aspects - How much fund is require? When the fund is require? How the fund should be raised? How to use the funds?

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