Question

Name the process which helps in determining the objectives, policies, procedures, programmes and budgets to deal with the financial activities of an enterprise. Explain its three points of importance?

Answer 1

Financial Planning is process of framing objectives, policies, procedures, programmes and budgets regarding the financial activities of a concern. This ensures effective and adequate financial and investment policies. The importance can be outlined as-

1. Financial Planning helps in ensuring a reasonable balance between outflow and inflow of funds so that stability is maintained.

2. Financial Planning ensures that the suppliers of funds are easily investing in companies which exercise financial planning.