Which among the following is an objective of financial planning?

The correct answer is Option (2) → To ensure availability of funds whenever required

• Option (1) To ensure that labor workforce is not idle — Incorrect. Keeping the workers busy and productive is the work of staffing and directing, not of financial planning.

• Option (2) To ensure availability of funds whenever required — Correct. Financial planning has two objectives: enough money at hand, but not more than needed. This is the first one. The firm has to estimate how much money it needs and when it needs it, both for long-term assets and for day-to-day expenses. The work then never stops for want of money.

• Option (3) To ensure that employees are giving their optimum output — Incorrect. Getting the best out of people is achieved through motivation, supervision and control.

• Option (4) To see that firm has plenty of resources irrespective of their necessity — Incorrect. This is the opposite of the second objective. Money raised without need lies unused and still costs the firm interest. Avoiding that is part of the purpose of planning.