What is meant by financial planning? State its objectives.

The process of estimating the fund requirements of a business and specifying the sources of funds is called financial planning. OR Financial planning is the preparation of a financial blueprint of an organisation’s future operations.

Objectives of financial planning:

(i) To ensure availability of funds whenever required which involves estimation of the funds required, the time at which these funds are to be made available and the sources of these funds.

(ii) To see that the firm does not raise resources unnecessarily as excess funding is almost as bad as inadequate funding. Financial planning ensures that enough funds are available at right time.

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