Question

Discuss the two objectives of financial planning.

Answer 1

SOLUTION :

The two objectives of financial planning are as follows :  

(a) Ensuring adequate funds :  

It provides adequate cash for enabling enterprise to meet its day to day expenses and also unforeseen expenditure.

(b) To see that the firm does not raise funds  unnecessarily :  

If excess of funds are available with the business unit , it will unnecessarily add to the cost and may encourage wasteful expenditure and misuse of funds.

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Here are more questions of the same chapter :  

A fixed asset should be financed through:  

a. a long-term liability  

b. short-term liability  

c. a mix of long and short-term liabilities

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