Financial Planning
Financial planning refers to organizing, directing and controlling of the financial activities like procurement and utilization of funds in an enterprise. It means applying general management principles to financial resources so that it helps you manage your income; set your financial goals and allocate your assets across investments while keeping in mind your limitations and requirements.
The Scope of Financial Planning in an Organization
- Financial planning for your organization will include the investment decisions of the fixed assets (also known as capital budgeting) and current assets (also known as working capital decisions).
- It will include all the financial decisions that relate to the raising of finance from various resources. Financial Planners help you take the decision depending on the type of source, period of financing, cost of financing and the returns thereby.
- The finance manager also takes dividend decisions with regards to the net profit distribution. It includes both deciding the dividendsand its rate for shareholders as well as the amount of retained profits that the company will keep. The decision of the retained profits usually depends upon the expansion and diversification plans of the enterprise.
Objectives of Financial Planning
Financial planning consists of a variety of things. All these ought to be planned keeping in mind the situation and the result of the planning. The objective always is:
- To ensure that the supply of funds are regular and adequate for the organization
- To analyze the earning capacity, market price of shares and expectations of the shareholders in order to ensure adequate returns to them
- To ensure optimum funds utilization at the lowest cost possible
- To ensure safety on investment with a focus on ventures that is sure to give an adequate rate of returns
- To plan a sound capital structure with a fair composition of capital that can balance and maintain the ratio between debt and equity capital.
In a nutshell, KN Securities will assess present assets and resources to understand the current situation, set goals and objectives in terms of returns and risks, and determine constraints and financial planning areas like taxes, legalities, and liquidity. KN Securities will also determine an appropriate plan and strategy that helps you achieve your financial goals while also evaluating the plan regularly to adjust and modify according to the changing conditions of the market.