The financial planning strives to achieve the following objectives:
A. To ensure availability of funds whenever required
B. To raise funds only through long-term sources of capital such as equity or preference shares
C. To see that the firm does not raise resources unnecessarily
D. To ensure idle funds at the disposal of an enterprise.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → A and C Only
Financial planning means estimating in advance how much money the business needs, when it needs it and where it will come from.
(A) To ensure availability of funds whenever required — Correct. This is the first of its twin objectives. The plan estimates the funds needed for each purpose and the time they are needed, so the money is ready.
(B) To raise funds only through long-term sources of capital such as equity or preference shares — Incorrect. Financial planning does not limit itself to long-term sources. It identifies the possible sources, long term and short term, to suit each need.
(C) To see that the firm does not raise resources unnecessarily — Correct. This is the second objective. Excess funding is almost as bad as too little, because surplus money adds to the cost.
(D) To ensure idle funds at the disposal of an enterprise. — Incorrect. This is the opposite of the second objective. Good planning puts surplus money to use so that funds are not left idle.
NCERT (2026-27 Edition): “Financial Planning … Thus, financial planning strives to achieve the following twin objectives. |