CUET Preparation Today
Which of the following is an objective of Financial planning? |
Doing only what is possible with the funds that the firms have at its disposal Ensuring that the firm always have significantly more funds than required so that there is no paucity of funds Minimizing the external borrowing by resorting to equity issues Ensuring that the firm faces neither a shortage nor a excess of unusable funds |
Ensuring that the firm faces neither a shortage nor a excess of unusable funds |
The correct answer is option 4- Ensuring that the firm faces neither a shortage nor a excess of unusable funds. Ensuring that the firm faces neither a shortage nor a excess of unusable funds is the objective of financial planning.
Financial planning is essentially preparation of a financial blueprint of an organisation’s future operations. The objective of financial planning is to ensure that enough funds are available at right time. If adequate funds are not available the firm will not be able to honour its commitments and carry out its plans. On the other hand, if excess funds are available, it will unnecessarily add to the cost and may encourage wasteful expenditure. Thus, financial planning strives to achieve the following twin objectives. (a) 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. (b) 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. |
