Financial Planning helps in ensuring a reasonable balance between outflow and inflow of funds so that stability is maintained.

This ensures effective and adequate financial and investment policies. Importance of Financial Planningįinancial Planning is process of framing objectives, policies, procedures, programmes and budgets regarding the financial activities of a concern. 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.Framing financial policies with regards to cash control, lending, borrowings, etc.

This includes decisions of debt- equity ratio- both short-term and long- term. Determining capital structure- The capital structure is the composition of capital, i.e., the relative kind and proportion of capital required in the business.Capital requirements have to be looked with both aspects: short- term and long- term requirements. Determining capital requirements- This will depend upon factors like cost of current and fixed assets, promotional expenses and long- range planning.Objectives of Financial Planningįinancial Planning has got many objectives to look forward to: It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise.

Financial Planning is the process of estimating the capital required and determining its competition.

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