Question

PLEASE PROVIDE A rationale (50–100 words for each question) for each question.

Questions:

(1) How you consider the union budgets, Government regulations and amendmentswhile acquiring long term and short term capital ?

(2) Did you undergo any crisis or troubles in planning financial budget for the next financial year?

(3) What is the financial planning model your organization has chosen?

(4) What are the main weaknesses in the financial planning model you have chosen? what are the main drawbacks you have faced due to the model?

(5) How your company's long-term and short-term goals affects the budgetory planning and corresponding decisions?

(6) Can you explain what measures your company has been taken to control the financial strategies formulated for long-term financial planning?

(7) In what areas did you give emphasis in your next company budget?

(8) What measures your company has been taken to monitor and control the existing financial conditions and for accommodating changes if necessary?

(9) What are the main factors you consider while employing an additional long-term finance if necessary?

(10) Did you ever faced any difficulties from the Government while making your financial plans and strategies? What are they?

(11) How your company's financial planning methodology differ from your competitors?  

Answer 1

Answer:

Let us take an example of SRM Chemicals Pvt. Ltd. Located in Nagpur City of India. The company deals in making the ink for the pens and has been established in the year 1980. The company presently employees 6540 staff across all its small business units in India.

Answer 1:

Role of the union budgets, Government regulations and amendments while acquiring long term and short term capital:

1. Union budget helps in the determination of the interest rate for the capital to be borrowed from the financial institutions across the country.

2. Most of the financial institutions do not provide the loans to the corporate because of the huge amounts to be borrowed and increase in the bad debts.

3. Government, in its union budget, defines the various institutions from whom the short term and the long term loans could be borrowed. Government also defines the schemes including the mortgages and the cost of bad debts policies to both the borrower and the lending institution.

Answer 2:

Our organisation has never undergone any crisis while planning for the financial budget for the next financial year as our organisation always keep the surplus and reserves for the investments and to deal with the crisis in the unfavourable situations for the businesses. Financial crisis of any of the organisation could be controlled by accurately designing and forecasting all the financial and other departmental activities on the basis of the past data and the previous experiences, active and accurate decisions from the top management of the organisation, time analysis while allocating the key financial and other important activities related to the business and allocating the expenses for various activities in a calculated manner.

Answer 3 :

Our organisation has chosen ‘Forecasting Model’ for financial planning and forecasting. This technique of forecasting is primarily used for comparing the forecast with the budgeted plan of the organisation as far as financial planning is concerned. Financial forecasting is generally carried out by studying the previous account statements of the organisation such as balance sheet, fund flow statement, cash flow statement and the profit and loss statement. This is usually adopted for long term and short term activities to be carried out by taking into consideration the present and the future market conditions as per the trend of the market. The key decisions involved for the short term are the purchase of raw material, acquisition of equipments and machineries, hiring of extra work force, etc. and that for the long term, the key decisions includes the purchase of land, acquisition of plant, diversification plans, etc.

Answer4:

The weaknesses of the forecasting model for financial planning are mostly for the long term planning. Accurate planning for the long term is an impossible task. The market may or may not respond in the same way as we have forecasted it at the present situation by taking into consideration its past behaviour. Taking action on the basis of long term forecasting may lead to losses for the company. Purchasing a land by forecasting for the period ahead of ten years locks the capital and reserves of the firm. Acquisition of other facility may lead to the locking of capital of the organisation and that of the shareholders as well. This invites the risk for the organisation.