Read the passage given below and answer the question.

Mr. Rajesh Gulati is the Finance Manager of 'Health and Life Ltd.' a company dealing with health and organic food items. The company sells its products in smaller quantities in attractive containers. Moreover they have also decided to provide an additional layer of packaging for their products for the purpose of protections along with necessary storage, identification and even convenient transportation.

Keeping up with the latest packaging technology the company decided to upgrade its machinery. This, however, involved a major decision making as to how funds should be invested, so what the company is able to earn highest possible return.

Mr. Gulati estimated the amount of funds required for this purpose. He began with the preparation of 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 internal sources. For the remaining funds he is trying to find out alternative sources.

The various objectives of financial planning concept identified in the case study are :

(a) To see for stock market reactions

(b) To ensure availability of funds whenever required

(c) To prepare financial budget

(d) To take care of purchasing raw material

(e) To see that the firm does not raise resources unnecessarily

Choose the most appropriate answer from the options given below :

(b) and (e) only

The correct answer is option 4- (b) and (e) only.

Financial planning strives to achieve the following twin objectives.

• To ensure availability of funds whenever required: This include a proper estimation of the funds required for different purposes such as for the purchase of long-term assets or to meet day-to-day expenses of business etc. Apart from this, there is a need to estimate the time at which these funds are to be made available. Financial planning also tries to specify possible sources of these funds.

• To see that the firm does not raise resources unnecessarily: Excess funding is almost as bad as inadequate funding. Even if there is some surplus money, good financial planning would put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost.