Sharma ltd. is a market leader in the business of export of garments. Now he wants to venture into leather goods which require different productive resources. For this, he prepared a blue print to estimate the amount of funds required and the timings to ensure that adequate funds are available at the right time.

Identify the financial concept discussed in the above para.

Financial Planning

The correct answer is Option (2) → Financial Planning.

The financial concept discussed in the above paragraph is Financial Planning.

Sharma Ltd. is preparing a blueprint for its expansion into leather goods, which reflects the process of financial planning.

Financial planning is 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. Financial planning strives to achieve the following twin objectives-
(a) To ensure availability of funds whenever required
(b) To see that the firm does not raise resources unnecessarily.

A proper matching of funds requirements and their availability is sought to be achieved by financial planning. This process of estimating the fund requirement of a business and specifying the sources of funds is called financial planning. Financial planning takes into consideration the growth, performance, investments and requirement of funds for a given period. Financial planning includes both short-term as well as long-term planning.