© examsnet.com
Question : 12
Total: 32
Ramnath Ltd., is dealing in import of organic food items in bulk. The company sells the items in smaller quantities in attractive packages. Performance of the company has been up to the expectations in the past. Keeping up with the latest packaging technology, the company decided to upgrade its machinery. For this, the Finance Manager of the company, Mr. Vikrant Dhull, estimated the amount of funds required and the timings. This will help the company in linking the investment and the financing decisions on a continuous basis.
Therefore, Mr. Vikrant Dhull began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources. For the remaining funds he is trying to find out alternative sources.
Identify the financial concept discussed in the above paragraph. Also, state any two points of importance of the financial concept, so identified.
Therefore, Mr. Vikrant Dhull began with the preparation of a sales forecast for the next four years. He also collected the relevant data about the profit estimates in the coming years. By doing this, he wanted to be sure about the availability of funds from the internal sources. For the remaining funds he is trying to find out alternative sources.
Identify the financial concept discussed in the above paragraph. Also, state any two points of importance of the financial concept, so identified.
Solution:
Financial planning: It is the process of estimating the fund requirement of a business and specifying the sources of such fund.
Importance of financial planning (any two):
(i) It ensures smooth running of a business enterprise by ensuring availability of funds at the right time.
(ii) It helps in anticipating future requirement of the funds and avoid barriers, shocks and surprises.
(iii) It increases the efficiency in the operations by clubing wastages of funds, duplication of efforts and gaps in planning.
Importance of financial planning (any two):
(i) It ensures smooth running of a business enterprise by ensuring availability of funds at the right time.
(ii) It helps in anticipating future requirement of the funds and avoid barriers, shocks and surprises.
(iii) It increases the efficiency in the operations by clubing wastages of funds, duplication of efforts and gaps in planning.
© examsnet.com
Go to Question: