What is meant by Financial Planning? State any three points of its importance.

The process of estimating the fund requirements of a business and specifying the sources of funds is called Financial Planning.

Financial planning is important because:

  1. It helps the company to prepare for the future.
  2. It helps in avoiding business shocks and surprises.
  3. It helps in reducing waste, duplication of efforts, gaps in planning and confusion.
  4. It provides a link between investment and financing decisions.

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