Question

What are the twin objectives of financial planning?

• A. To ensure availability of funds whenever require
• B. To see that the firm does not raise resources unnecessarily
• C. Both a and b
• D. None of the above

Answer 1

Answer: (C)

Both a and b

Financial planning strives to achieve the following twin objectives.

a) To ensure availability of funds whenever required: This include a proper estimation of the funds required for different purposes such as for the purchase of longterm assets or to meet day-to-day expenses of business etc. Apart from this, there is a need to estimate the time at which these funds are to be made available. Financial planning also tries to specify possible sources of these funds.

(b) To see that the firm does not raise resources unnecessarily: Excess funding is almost as bad as inadequate funding. Even if there is some surplus money, good financial planning would put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost.