Question

State any three points of importance of financial planning.

Answer 1

Financial planning plays a crucial role in the success of an organisation.

Its importance can be highlighted from the following factors:

1. Helps in facing eventual situations:
   Financial planning helps in forecasting future situations. In this way, it prepares an organisation to cope with adverse situations in a better manner.
2. Helps in avoiding surprises and shocks:
   Through financial planning, an organisation can detect situations of shortage or surplus of funds that may arise in the future. Therefore, it prepares the managers in advance for such situations.
3. Improves coordination:
   Through financial planning, various business activities such as sales and production are coordinated in a better manner. Such coordination ensures the smooth functioning of the business.