Please answer these questions. Thanks 1. What is the purpose of financial planning? 2. What are...

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?

Solutions

Expert Solution

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

or expanding the existing business.

for rest of questions please re-post

jeff jeffy answered 11 months ago

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