“It aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds and helps in the smooth functioning of an organisation”. Identify the financial concept discussed in the statement:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Financial planning
Option (1) Financial function — Incorrect. This is a general name for the finance work of a business. It is not the particular process the statement describes.
Option (2) Monetary Policy — Incorrect. Monetary policy is made by the Reserve Bank of India for the whole economy, to control money supply and interest rates. It is not a decision of one company.
Option (3) Financial leverage — Incorrect. Financial leverage is the proportion of debt in the total capital of a firm. It deals with the mix of funds, not with planning when funds will be needed.
Option (4) Financial planning — Correct. Financial planning means preparing a financial blueprint of the organisation’s future operations. It estimates how much money will be needed, when it will be needed and where it will come from. Because the need is worked out in advance, the firm is not caught short of funds, and it does not raise more than it needs. This removes the uncertainty about the availability and timing of funds.
NCERT (2026-27 Edition): “Financial Planning 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. …” “Importance Financial planning is an important part of overall planning of any business enterprise. It aims at enabling the company to tackle the uncertainty in respect of the availability and timing of the funds and helps in smooth functioning of an organisation. …” |