| Finance in relation to business is concerned with | | | | selecting the best one from the available |
| the task of providing funds needed by the | | | | options.The planning requires a long-term estimate |
| enterprise in terms that are most favorable in the | | | | of profits which in turn involves a projection of |
| light of its objectives. The finance function of a | | | | sales and costs of operation for a period of |
| business is concerned with procurement of funds | | | | years. Accordingly, long range financial planning |
| and its effective utilization in business. It covers | | | | becomes essential for a company that wishes to |
| financial planning, forecasting of cash receipts and | | | | grow. The company has to establish objectives |
| disbursements, realizing of funds, using and | | | | and goals as part of a master plan for long range |
| allocation of funds and financial control. Financial | | | | survival and growth. Coordinated thinking forms |
| planning helps in defining financial goals, setting | | | | the basis of financial planning for making an |
| objectives and developing a plan to achieve them. | | | | optimum utilization of funds, particularly of cash |
| Planning is not master-minding the future, and any | | | | balances.Unneeded cash can be invested in |
| attempt to do so is foolishness. Human beings can | | | | income-producing securities. Financial planning is |
| neither predict nor control the future. For this | | | | used as a control device to fix standards of |
| reason, management has to clarify their | | | | performance and evaluation of the results. It is |
| objectives and determine what actions must be | | | | used to pre-test the financial feasibility of various |
| taken, when, by whom, and at what cost to | | | | programs and in that sense it is of crucial |
| achieve the cherished goals. Financial planning is the | | | | importance because action once taken becomes |
| process of evaluating different investing and | | | | difficult to retract. |
| financing opportunities available to a firm and | | | | |