Question

To avoid the problem of shortage and surplus of funds, what is required in financial management?

Name the concept and explain why three points of its importance?

Answer 1

Financial Planning is required to avoid shortage or surplus of finance.

Importance of financial planning is:

1- It helps in coordinating the various business activities such as sales,purchases, production, finance etc.

2-It helps in setting up standard and compare with the actual performance.

The deviations, if any are then analysed. Causes found out and corrective measures are taken.