A Complete Guid Financial Planning : Meaning , Types, Importance Elements & More by janardan kukreja
Financial Planning: A Complete Guide
Meaning, Types, Importance, Elements & More by Janardan Kukreja
What is Financial Planning?
Financial Planning is the pre-determination of future financial activities essential for achieving business objectives. It includes setting financial goals, formulating policies, and developing procedures.
Definition (Arthur S. Dewing)
Financial Planning includes:
- Capitalisation
- Capital Structure
- Proper Management of Capital
Core Elements of Financial Planning
- Determination of Financial Objectives
- Formulation of Financial Policies
- Developing Financial Procedures
Types of Financial Planning
- Short-Term: Focused on working capital and liquidity (usually for 1 year).
- Medium-Term: Maintenance, asset replacement, R&D (1–5 years).
- Long-Term: Expansion, capitalisation, restructuring (5+ years).
Importance of Financial Planning
- Successful promotion and operations
- Efficient use and conservation of capital
- Business expansion and development
- Liquidity, profitability, and solvency management
Limitations of Financial Planning
- Depends heavily on forecasts
- Often lacks flexibility
- May become static
Financial Plan: The End Product
A financial plan is the structured outcome of financial planning, detailing capital needs, sources, and allocation strategies.
Key Components of a Financial Plan
- Capitalisation: Estimating total capital needs
- Capital Structure: Choosing the sources of capital
- Assets Management: Effective utilization and control of capital
Characteristics of a Sound Financial Plan
- Simplicity
- Foresightedness
- Flexibility
- Liquidity
- Full Fund Utilization
- Contingency Forecasting
Factors in Drafting a Financial Plan
- Nature and size of the business
- Level of risk and external environment
- Sources of finance
- Government regulations and market conditions
Financial Planning: A Complete Guide
Meaning, Types, Importance, Elements & More by Janardan Kukreja
What is Financial Planning?
Financial Planning is the pre-determination of future financial activities essential for achieving business objectives. It includes setting financial goals, formulating policies, and developing procedures.
Definition (Arthur S. Dewing)
Financial Planning includes:
- Capitalisation
- Capital Structure
- Proper Management of Capital
Core Elements of Financial Planning
- Determination of Financial Objectives
- Formulation of Financial Policies
- Developing Financial Procedures
Types of Financial Planning
- Short-Term: Focused on working capital and liquidity (usually for 1 year).
- Medium-Term: Maintenance, asset replacement, R&D (1–5 years).
- Long-Term: Expansion, capitalisation, restructuring (5+ years).
Importance of Financial Planning
- Successful promotion and operations
- Efficient use and conservation of capital
- Business expansion and development
- Liquidity, profitability, and solvency management
Limitations of Financial Planning
- Depends heavily on forecasts
- Often lacks flexibility
- May become static
Financial Plan: The End Product
A financial plan is the structured outcome of financial planning, detailing capital needs, sources, and allocation strategies.
Key Components of a Financial Plan
- Capitalisation: Estimating total capital needs
- Capital Structure: Choosing the sources of capital
- Assets Management: Effective utilization and control of capital
Characteristics of a Sound Financial Plan
- Simplicity
- Foresightedness
- Flexibility
- Liquidity
- Full Fund Utilization
- Contingency Forecasting
Factors in Drafting a Financial Plan
- Nature and size of the business
- Level of risk and external environment
- Sources of finance
- Government regulations and market conditions
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