Read the following passage and answer the question.

RST Ltd. is registered with capital of ₹20 crore. The paid up capital is ₹12 crore. The company was facing shortage of funds so management decided to raise funds by issue of equity shares of ₹100 each. The issue was fully subscribed by public. After some time, it was realised that the funds raised were in excess of the actual requirement.  The company raised the funds for expanding the business of manufacturing steel.

Which concept is not considered by the company before deciding the amount of funds to be raised?

Financial planning

The correct answer is option 1- Financial planning.

Financial planning is not considered by the company before deciding the amount of funds to be raised.

Financial planning involves carefully assessing the exact amount of funds needed for a business's operations, expansion, or other requirements, taking into account future cash flows, potential risks, and how to effectively utilize the funds. In this case, the company raised more funds than necessary, which suggests that they did not perform proper financial planning to accurately estimate the required capital for expanding their steel manufacturing business. This led to the issue of excess funds, which could have been avoided with better financial planning.