Financial Planning is the process of finding out the capital needed and its competition. It is a procedure of designing your company's' economic policies in relation to investment, procurement, and administration of funds in a business.
Objectives of Financial Planning-
There are several objectives that have to look forward to financial planning. These include:
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- Cost of current and fixed assets long-range planning and promotional expenses determine capital requirements. You have to consider both the aspects of capital requirements, i.e. Short-term and long-term requirements.
- The proportion of capital and its relative kind in the business helps in determining the capital structure. This comprises of decisions of equity- debt- ratio- both long-term and short-term.
- Making economic policies related to lending, cash control, borrowings and many more.
- A Fee-Only Financial Advisor makes certain that the scarce financial resources are maximally used in the greatest manner at least cost in order to obtain the highest returns on investment.
Importance of Financial Planning-
Financial Planning is the procedure of designing policies, objectives, programs, processes, and budgets related to the monetary activities of a concern. This guarantees adequate and efficient investment policies. The significance can be outlined as:
- Sufficient funds have to be ensured.
- Good financial planning guarantees that the fund suppliers are effortlessly investing in the businesses which exercise planning of finances. This Planning assists in making certain an affordable balance between inflow and outflow funds to maintain stability.
- Financial Planning results in growth and expansion programs that help in the company's survival for a long time.
- You can reduce uncertainties related to varying market trends which can be faced straightforwardly through enough funds.
- It helps in making certain profitability and stability in concern.