Discuss the two objective of Financial Planning. (2024)

FAQs

Discuss the two objective of Financial Planning.? ›

Financial Planning aims at full utilisation of funds. It ensures that both inadequate funds as well as excess funds are avoided. Inadequate funds hinders the smooth operations and the firm is unable to carry its commitments.

The objectives of financial management are as follows: Profit maximisation. Mobilisation of finance in a proper way. Ensuring the company's survival. Maintaining proper coordination with other departments.

That will involve both saving—setting aside money you'll need in the short term or for emergencies—as well as investing, which is setting aside money you'll need in the long term and that, ideally, can grow.

Step 2: Identifying and selecting goals

The second step is identifying and selecting goals for the client. Now that you have gathered all this data, the next step in your workflow is to set up a meeting to identify financial goals with the client.

Developing a household budget and setting aside primary savings are two functions of most financial plans. Once these two necessities are in place, a financial planner can then develop and implement an investment strategy designed to match your level of risk and lifestyle goals.

Objectives of Financial Planning

It ensures the timely availability of finance. To see that firm does not raise resources unnecessarily: Excess funding is as bad as inadequate or shortage of funds. If there is surplus money, financial planning must invest it in the best possible manner.

1. To provide useful information to the management of an organisation for the purpose of planning, controlling, analysing, and decision making. 2. To provide information to prospective investors to attract them, so that they can take rational decisions regarding their investment based on the reports.

The financial management functions involve organising, planning, controlling, and directing an organisation's financial activities.

Two key aspects of financial planning are cash planning and profit planning. Cash planning involves the preparation of the cash budget and profit planning involves preparation of pro forma statements. To make cash budget and pro forma statements for a firm, accounting knowledge is needed.

What is the two step approach to financial planning? ›

Types of Financial Goals

Short-term goals. These can be reached within a year and are for relatively smaller things, like buying a computer or TV or paying for a vacation or setting up an emergency fund. Mid-term goals. These can be done short-term but often take up to five years.

Financing activities include: Issuing and repurchasing equity. Borrowing and repaying short-term and long-term debt.

The five key functions of a financial system are: (i) producing information ex ante about possible investments and allocate capital; (ii) monitoring investments and exerting corporate governance after providing finance; (iii) facilitating the trading, diversification, and management of risk; (iv) mobilizing and pooling ...

However, two of the most common goals of financial management are to maximize profits and reduce risk. This can help ensure that the company can generate maximum returns for investors and sustain itself long-term.

Answer: The 2 objectives of accounting are – Maintaining a systematic record of all financial transactions and preparing financial reports to access the financial position of the business organisation.

The term financial management means obtaining and managing funds. And the primary objective of financial management is to increase the firm's value. So, what is the concept of financial management? There are two basic concepts of financial management, obtaining funds and utilising these funds.