Scribd Logo
Upload

Welcome to Scribd!

  • 235 views

    Financial Planning

    Uploaded by

    ਸਰਦਾਰ ਦੀਪ ਗਿੱਲ
    Financial planning is the process of determining capital requirements, establishing financial policies, and managing funds. It involves setting goals, evaluating alternatives, creating an action plan, and revising the plan over time based on changes. The key steps are to assess the current financial situation, develop goals, identify alternative courses of action, evaluate the alternatives considering risks and consequences, create and implement a plan, and reevaluate the plan as needed. Financial planning helps ensure adequate funds, balance for the business, investor confidence, growth, and reduced uncertainties.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Financial Planning

    Uploaded by

    ਸਰਦਾਰ ਦੀਪ ਗਿੱਲ
    235 views4 pages
    Financial planning is the process of determining capital requirements, establishing financial policies, and managing funds. It involves setting goals, evaluating alternatives, creating an action plan, and revising the plan over time based on changes. The key steps are to assess the current financial situation, develop goals, identify alternative courses of action, evaluate the alternatives considering risks and consequences, create and implement a plan, and reevaluate the plan as needed. Financial planning helps ensure adequate funds, balance for the business, investor confidence, growth, and reduced uncertainties.

    Original Description:

    FP

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Financial planning is the process of determining capital requirements, establishing financial policies, and managing funds. It involves setting goals, evaluating alternatives, creating an action plan, and revising the plan over time based on changes. The key steps are to assess the current financial situation, develop goals, identify alternative courses of action, evaluate the alternatives considering risks and consequences, create and implement a plan, and reevaluate the plan as needed. Financial planning helps ensure adequate funds, balance for the business, investor confidence, growth, and reduced uncertainties.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    235 views4 pages

    Financial Planning

    Uploaded by

    ਸਰਦਾਰ ਦੀਪ ਗਿੱਲ
    Financial planning is the process of determining capital requirements, establishing financial policies, and managing funds. It involves setting goals, evaluating alternatives, creating an action plan, and revising the plan over time based on changes. The key steps are to assess the current financial situation, develop goals, identify alternative courses of action, evaluate the alternatives considering risks and consequences, create and implement a plan, and reevaluate the plan as needed. Financial planning helps ensure adequate funds, balance for the business, investor confidence, growth, and reduced uncertainties.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    FINANCIAL PLANNING

    Financial Planning is the process of estimating the capital required and determining
    its competition. It is the process of framing financial policies in relation to
    procurement, investment and administration of funds of an enterprise.

    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 have to 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,


    programmes 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 programmes
    which helps in long-run survival of the company.

    1
    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 an d
    profitability in concern.

    Process of Financial Planning

    1. Determine your current financial Situation: In this first step of the


    financial planning process, you will determine your current financial
    situation with regard to income, savings, living expenses, and debts.
    Preparing a list of current asset and debt balances and amounts spent for
    various items gives you a foundation for financial planning activities.

    2. Developing Financial Goals: You should periodically analyze your


    financial values and goals. This involves identifying how you feel about
    money and why you feel that way. The purpose of this analysis is to
    differentiate your needs from your wants.

    3. Identifying alternative course of action: Developing alternatives is


    crucial for making good decisions. Although many factors will influence
    the available alternatives, possible courses of action usually fall into these
    categories:

    Continue the same course of action.


    Expand the current situation.
    Change the current situation.
    Take a new course of action.
    Not all of these categories will apply to every decision situation; however,
    they do represent possible courses of action.
    Creativity in decision making is vital to effective choices. Considering all of
    the possible alternatives will help you make more effective and satisfying
    decisions.

    4. Evaluating Alternatives: You need to evaluate possible courses of action, taking


    into consideration your life situation, personal values, and current economic
    conditions.

    Consequences of Choices. Every decision closes off alternatives. For


    example, a decision to invest in stock may mean you cannot take a vacation.

    2
    A decision to go to school full time may mean you cannot work full
    time. Opportunity cost is what you give up by making a choice. This cost,
    commonly referred to as the trade-off of a decision, cannot always be
    measured in dollars.
    Decision making will be an ongoing part of your personal and financial
    situation. Thus, you will need to consider the lost opportunities that will
    result from your decisions.

    Evaluating Risk

    Uncertainty is a part of every decision. Selecting a college major and


    choosing a career field involve risk. What if you dont like working in this
    field or cannot obtain employment in it?
    Other decisions involve a very low degree of risk, such as putting money in
    a savings account or purchasing items that cost only a few dollars. Your
    chances of losing something of great value are low in these situations.
    In many financial decisions, identifying and evaluating risk is difficult. The
    best way to consider risk is to gather information based on your experience
    and the experiences of others and to use financial planning information
    sources

    5. Creating & Implementing a financial action plan:

    In this step of the financial planning process, you develop an action plan.
    This requires choosing ways to achieve your goals. As you achieve your
    immediate or short-term goals, the goals next in priority will come into
    focus.
    To implement your financial action plan, you may need assistance from
    others. For example, you may use the services of an insurance agent to
    purchase property insurance or the services of an investment broker to
    purchase stocks, bonds, or mutual funds

    6. Reevaluate and Revise Your Plan:

    Financial planning is a dynamic process that does not end when you take a
    particular action. You need to regularly assess your financial decisions.
    Changing personal, social, and economic factors may require more frequent
    assessments.
    When life events affect your financial needs, this financial planning process
    will provide a vehicle for adapting to those changes. Regularly reviewing this

    3
    decision-making process will help you make priority adjustments that will
    bring your financial goals and activities in line with your current life situation.

    You might also like