Question

Financial planning arrives at :

Options

• minimising the external borrowing by resorting to equity issues

• entering that the firm always have significantly more fund than required so that there is no paucity of funds

• ensuring that the firm faces neither a shortage nor a glut of unusable funds

• doing only what is possible with the funds that the firms has at its disposal

Answer 1

ensuring that the firm faces neither a shortage nor a glut of unusable funds

Explanation -

Financial planning strives to ensure that there is neither a lack nor an excess of unusable funds in the company. If funds are in insufficient supply, the company will be unable to carry out its planned activities and obligations. If there are surplus cash available, on the other hand, it raises the cost of doing business and encourages waste. Financial planning, in this case, is concerned with guaranteeing the timely availability of just enough finances.