Name and define the activity which essentially involves preparation of financial blueprint of an enterprise’s future operations. Also, state any two reasons why this activity is important?
Name and define the activity which essentially involves preparation of financial blueprint of an enterprise’s future operations. Also, state any two reasons why this activity is important?
Financial planning is the blueprint of an enterprises’ future operations. It can be defined as the process and function of estimating capital requirements of a business determining the forms and proportion of sources or capital for use and formulating policies for the administration of funds.
(i) Adequate funds: Financial planning aims to plan adequate and sufficient funds to carry out daily business operations that cater to short-term, medium-term and long-term goals.
(ii) Minimum cost of capital: Financial planning involves determining an appropriate mix of equity and debt, which makes capital available at a minimum cost.
Financial planning is the blueprint of an enterprises’ future operations. It can be defined as the process and function of estimating capital requirements of a business determining the forms and proportion of sources or capital for use and formulating policies for the administration of funds.
(i) Adequate funds: Financial planning aims to plan adequate and sufficient funds to carry out daily business operations that cater to short-term, medium-term and long-term goals.
(ii) Minimum cost of capital: Financial planning involves determining an appropriate mix of equity and debt, which makes capital available at a minimum cost.
