The correct answer is Option (2) → (A), (B) and (C) only
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(A) To ensure availability of funds whenever required. This is a core objective of financial planning, known as the financial objective or liquidity objective. It ensures that the right amount of funds is available at the right time.
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(B) To see that the firm does not raise funds unnecessarily. This is another core objective, known as the anti-objective or proper utilisation objective. It ensures that surplus/idle funds are avoided, as they increase the cost of capital and result in wastage.
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(C) Helps to cope with business shocks. Financial planning prepares a firm for future uncertainties (like a sudden drop in sales or an economic downturn) by preparing budgets, forecasts, and maintaining adequate liquidity, making it a key element of risk management.
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(D) Helps in minimizing cost of production. While financial planning leads to efficient resource allocation and capital structure management (which minimizes the cost of capital), the direct and primary function of minimizing the cost of production (operating costs) is achieved through other management techniques like cost accounting, cost control, efficiency audits, and production planning, rather than being cited as a primary objective of the financial plan itself.
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