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Financial Planning Objectives & Importance

The document discusses the objectives and importance of financial planning. The objectives of financial planning include determining capital requirements, determining capital structure, and framing financial policies. The importance of financial planning is that it ensures adequate funds, balances cash flows, attracts investors, facilitates growth, reduces uncertainties, and helps ensure stability and profitability.

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101 views1 page

Financial Planning Objectives & Importance

The document discusses the objectives and importance of financial planning. The objectives of financial planning include determining capital requirements, determining capital structure, and framing financial policies. The importance of financial planning is that it ensures adequate funds, balances cash flows, attracts investors, facilitates growth, reduces uncertainties, and helps ensure stability and profitability.

Uploaded by

biebs
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

BUSINESS SIMULATION

Reported By: Ocampo and Martinez

Objectives and Importance of Financial Planning

Objectives of Financial Planning


Financial Planning has got many objectives to look forward to:

a. Determining capital requirements- This will depend upon factors like cost of current and fixed
assets, promotional expenses and long- range planning. Capital requirements must be looked
with both aspects: short- term and long- term requirements.
b. Determining capital structure- The capital structure is the composition of capital, i.e., the
relative kind and proportion of capital required in the business. This includes decisions of debt-
equity ratio- both short-term and long- term.
c. Framing financial policies with regards to cash control, lending, borrowings, etc.
d. A finance manager ensures that the scarce financial resources are maximally utilized in the
best possible manner at least cost in order to get maximum returns on investment.

Importance of Financial Planning


Financial Planning is process of framing objectives, policies, procedures, programs 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. Adequate funds have to be ensured.


2. Financial Planning helps in ensuring a reasonable balance between outflow and inflow of funds
so that stability is maintained.
3. Financial Planning ensures that the suppliers of funds are easily investing in companies which
exercise financial planning.
4. Financial Planning helps in making growth and expansion programs which helps in long-run
survival of the company.
5. Financial Planning reduces uncertainties with regards to changing market trends which can be
faced easily through enough funds.
6. Financial Planning helps in reducing the uncertainties which can be a hindrance to growth of the
company. This helps in ensuring stability and profitability in concern.

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