In: Finance
Please answer these questions. Thanks
1. What is the purpose of financial planning?
2. What are the major decision areas involved in developing a plan?
3. What is the percentage of sales approach?
4. What is the internal growth rate?
6. What is the sustainable growth rate?
7.What are the major determinants of growth?
| Purpose of the finance planning |
| Finance is the lifeblood of the organisation . Without it no organisation can work. Therefore its proper management is must |
| finance has a cost. So finance management is to take care of keeping cost lower and the other hand its full utilisation |
| Finance planning is done to make the capital structure maximum so as keep the liquidity of the finance and keep the cost lower. |
| the optimum capital structure increase the value of the owner equity. |
| the key factor of finance planing is following |
| 1) requirement=in fiance planning it is must to ensure how much fund is required according to the variious need whether short ter or long term. |
| 2) cost= finance has cost. Therefore in finance planning it is managed to keep such sources which has lowest cost |
| 3) liquidity= finance planning need to arrange fund from that sources which can be liquidated as per need. For long |
| term need long term fiance sources and for short term fund short term fund sources is arranged. |
| sales approach and financial planning |
| sales is major role in sourcing the financing the fund in any firm. For projecting the future cash inflow, correct sales estimation is must. |
| it can be said that sales factor has the highest role in sourcing the fund required for working capital. In working capital budgeting the sales |
| provide the regular fund and is major factor. |
| internal growth rate |
| this is the highest growth rate a firm can achieved.this highest growth rate is achieved without the external source of fiance. Ie. Without long term debt. |
| the formula for calculating the the internal growth rate is total retained earning / total assets. Internal growth can be obtained by adding new product line |
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or expanding the existing business. for rest of questions please re-post |