Which of the following is NOT an importance of financial planning?

The correct answer is Option (3) → It provides a link between investment and dividend decisions on a continuous basis.

Option (1) It helps in co-ordinating various business functions, such as sales and production, by providing clear policies and procedures. — An importance of financial planning. Clear policies and procedures help functions such as sales and production work together.

Option (2) Its detailed plans of action reduce waste, duplication of efforts and gaps in planning. — An importance of financial planning. Detailed plans of action cut waste and repeated work, and leave no gaps in planning.

Option (3) It provides a link between investment and dividend decisions on a continuous basis. — Not an importance of financial planning. Financial planning provides a continuous link between the investment and financing decisions. It works out the funds each investment needs and where they will come from. With ‘dividend’ in place of ‘financing’, the line is wrong.

Option (4) By spelling out detailed objectives for business segments, it makes the evaluation of actual performance easier. — An importance of financial planning. Detailed objectives for each segment give a standard to judge actual performance against.