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State the two objectives of financial planning.
Financial planning means designing a blueprint of the financial operations of the firm. It ensures the smooth functioning of the organisation by the right allocation of resources available at the right time. It helps the firms are able to forecast the requirement of find in the future.
The two objectives of financial planning are:
a. To ensure the availability of sufficient funds in the company for different purpose such as purchasing long term assets, to meet the day to day expenses, etc. Financial planning also aims at specifying the source of these finances.
b. To ensure that the firm does not raise the resources unnecessarily. Excess funding is as bad as a shortage of funds. An efficient financial planning system ensures that the funds are not raised unnecessarily to avoid unnecessary addition of cost. If there is any surplus money, it should be used e in the best possible manner to avoid any loss for the organisation.
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