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Question

Financial planning arrives at __________________.

A
Minimising the external borrowing by resorting to equity issues
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B
Entering that the firm always have significantly more fund than required so that there is no paucity of funds
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C
ensuring that the firm paces neither a shortage nor a glut of unuable funds
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D
doing only what is possible with the funds that the firm has at tis disposal
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Solution

The correct option is A Minimising the external borrowing by resorting to equity issues
Financial planning aims at ensuring that the firm faces neither a shortage nor a glut of unusable funds. If there is shortage of funds then the firm will not be able to carry out its planned activities and commitment. On the other hand if there is excess funds available then it adds to cost of business which encourages waste of funds. Thus, financial planning focuses on ensuring the availability of just enough funds at right time.

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