Identify the correct statements in the context of financial planning.

(A) The objective of financial planning is to ensure that enough funds are available at the right time.

(B) Financial planning sees that firms do not raise funds unnecessarily from the market.

(C) Proper matching of funds requirements and their availability is sought to be achieved by financial planning.

(D) Financial planning includes both short-term and long-term planning.

Choose the correct answer from the options given below.

(A), (B), (C) and (D)

The correct answer is option 3- (A), (B), (C) and (D).

(A) The objective of financial planning is to ensure that enough funds are available at the right time- THIS IS TRUE. Financial planning is essentially the 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.

(B) Financial planning sees that firms do not raise funds unnecessarily from the market- THIS IS TRUE. One of the key roles of financial planning is to ensure that a business raises only as much money as it truly needs, and not more. Raising unnecessary funds can be costly and risky for several reasons.

(C) Proper matching of funds requirements and their availability is sought to be achieved by financial planning- THIS IS TRUE. 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.
Thus, a proper matching of funds requirements and their availability is sought to be achieved by financial planning.

(D) Financial planning includes both short-term and long-term planning- THIS IS TRUE. Financial planning includes both short-term as well as long-term planning. Long-term planning relates to long term growth and investment. It focuses on capital expenditure programmes. Short-term planning covers short-term financial plan called budget. Typically, financial planning is done for three to five years. For longer periods it becomes more difficult and less useful. Plans made for periods of one year or less are termed as budgets. Budgets are example of financial planning exercise in greater details. They include detailed plan of action for a period of one year or less. 

THUS, ALL STATEMENTS ARE TRUE. SO, CORRECT ANSWER IS OPTION 3.