Read the following passage carefully and answer the given questions.

Arun wants to open a retail mart. He is thinking over the selection of the best financing alternative. He made an estimation that ₹40 lakhs, is an adequate amount of money to start the venture. He is planning to finance the business by investing ₹25 lakhs of his own money and the rest would be financed by debts. He is very careful about the future cash-flow in the business because the cost of raising funds from external sources is significant. He is working out to ensure that enough funds are available at the 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. Since it will be a trading business, it needs lower investment in fixed assets. Since Arun is planning to initiate the business from a small level, the quantum of inventory and debtors required is generally low.

"He is working out to ensure that enough funds are available at right time." The above statement indicates that Arun is involved in:

Financial Planning

The correct answer is option 3- Financial Planning.

The statement - He is working out to ensure that enough funds are available at right time." refers to planning the availability, timing, and amount of funds needed for the business.

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.

Therefore, Arun is clearly involved in Financial Planning.