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Financial Management

Question
CBSEENBS12004712
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'Sound Financial Planning is essential for the success of any business enterprise.' Explain this statement by giving any six reasons. 

Solution

A sound financial planning is an important part of the success 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.
The importance of financial planning are:
(i) It helps in forecasting what may happen in future under different business situations. By doing so, it helps the firms to face the eventual situation in a better way. By preparing a blueprint of these three situations the management may decide what must be done different situations. 
(ii) It helps in avoiding business shocks and surprises and helps the company in preparing for the future.
(iii) If helps in coordinating various business functions, e.g, sales and production functions, by providing clear policies and procedures.
(iv) Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.
(v) It tries to link the present with the future. 
(vi) It provides a link between investment and financing decisions on a continuous basis.

Some More Questions From Financial Management Chapter

How the wealth of shareholders can be computed?

What is meant by Financial Management?

Every manager has to take three major decisions while performing the finance function. Explain them.

Explain any six factors affecting the financing decision of a company.

Explain any six factors affecting the dividend decision of a company.

What is meant by Dividend decision? State any four factors affecting the Dividend decision.

What is meant by Financing decision? State any four factors affecting the financing decision.

 

Explain briefly the factors affecting the investment decision.

Explain, in brief, any five factors that should be taken into consideration while determining the long-term dividend policy.

Or

Explain factors affecting the dividend policy of a company.

“Determining the relative proportion of various types of funds depends upon various factors”. Explain any five such factors.

Or

“Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors”. Explain any five such factors.

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