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Question
Name and state the aspect of financial management that enables to foresee the fund requirements both in terms of 'the quantum' and 'the timings'.
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Solution
‘Financial Planning’ is the division of financial management which makes an organisation to predict the need of business finance and the time required to generate the same. It attempts to develop a predetermined structure for the provision of finance in the business for its ventures.
RELATED QUESTIONS
Ramnath Ltd. is dealing in import of organic food items in bulk. The company sells the items in smaller quantities in attractive packages. Performance of the company has been up to the expectations in the past. Keeping up with the latest packaging technology, the company decided to upgrade its machinery. For this, the Finance Manager of the company, Mr Vikrant Dhull, estimated the amount of funds required and the timings. This will help the company in linking the investment and the financing decisions on a continuous basis. Therefore, Mr Vikrant Dhull began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources.
For the remaining funds, he is trying to find out alternative sources. Identify the financial concept discussed in the above paragraph. Also, State any two Points of the importance of the financial concept, so identified.
What is meant by Financial Risk?
Explain the twin objectives of financial planning.
Financial planning usually begins with the preparation of a ______ .
Detailed plans of action are prepared under financial planning. What benefits does this result in?
Assertion (1): Financial planning tries to link the present with the future.
Reason (R): Financial planning is essentially the preparation of a financial blueprint of an organisation's future operations.
What is financial planning?
What is the focus of financial planning?
What is the usual period for financial planning?
What are plans up to one year called?
What is the starting point in the basic steps of financial planning?
Which estimates come before determining the external fund requirement and sources?
Which budgets are made as part of the basic steps of financial planning?
What can happen when a business has too much debt?
How does higher industry volatility affect the amount of debt a business should carry?
What do banks check when considering debt?
What may some lenders rely on more than earnings?
What should business owners use before borrowing to make sound borrowing decisions?
