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First Page Previous Page Next Page / 31 Sections not available Zoom Out Zoom In Fullscreen Exit Fullscreen Select View Mode View Mode SlideshowScroll Readcast Add a Comment Embed & Share Readcast Reading should be social! Post a message on your social networks to let others k now what you're reading. Select the sites below and start sharing. Check_27x27Transparent Check_27x27Transparent Check_27x27TransparentLink account Readcast this DocumentTransparent Readcast Complete! Click 'send' to Readcast! edit preferences Set your preferences for next time...Choose 'auto' to readcast without being pro mpted. Salome Eliud Link account AdvancedCancel Add a Comment Submit share: Characters: 400 Share & Embed Add to Collections Download this Document for Free Auto-hide: off Presented by Jagannath Pati FINANCIAL PLAN A financial plan is a statement estimating the amount of capital requirements an d determining its composition. It emphasizes on the following aspects-How much fund is require ?When the fund i s require ?How the fund should be raised ?How to use the funds ? DEFINITION According to Cohen and Robbins Financial planning should : 1. Determine the financial resources require to meet the companys operating programm e. 2. Forecast the extent to which these requirements will be met by internal generati on of funds and the extent to which they will be met from external sources.

3. Develop the best plans to obtain the required external funds. 4. Establish and maintain a system of financial control governing the allocation an d useof funds. 5. Formulate programmes to provide the most effective profit-volume-cost relationsh ip. 6. Analyse the financial results of operations 7. Report facts to the top management and make recommendations on future operations of the firm OBJECTIVES OF FINANCIAL PLAN Adequate Funds Flexibility Long-term View Liquidity Optimum use Economy CHARACTERISTICS/PRINCIPLES OF ASOUND FINANCIAL PLAN Simplicity Based on clear-cut Objectives Less Dependence on Outside Sources Flexibility Solvency and Liquidity Cost Profitability STEPS IN FINANCIALPLANNING Establishing Financial Objectives Formulating Financial Policies Formulating Procedures Providing for flexibility ESTIMATING LONG-TERM ANDSHORT-TERM FINANCIAL NEEDS The finance required for a business can be broadly classifiedinto two main categ ories : 1. Fixed Capital Requirements, and 2.

Working Capital Requirements ASSESSMENT OF FIXED CAPITALREQUIREMENTS Estimation of Fixed Assets Requirements Estimation of Intangible Assets Requirements FACTORS AFFECTING THE ESTIMATIONOF FIXED ASSETS REQUIREMENTS Internal Factors a) Nature of Business b) Size of Business c) Activities Undertaken by the Enterprise or Scope of Business d) Production Techniques e) Mode of acquisition of Fixed assets(Extent of Lease or Hire) f) Acquisition of old Equipment and Plant g) Decision as Regards Ancilliary Units h) Availability of Fixed Assets at Concessional Rates External Factors a) International conditions and Economic Outlook b) Population Trends and its composition c) Shift in consumer Preferences d) Competitive factors e) Shift in technology f) Government Regulations ESTIMATION OF INTANGIBLE ASSETSREQUIREMENTS 1. Promotion Expenses 2. Incorporation and Organization Expenses 3. Cost of Financing 4. Initial Operating losses 5. Cost of Acquisition of patents, Copyrights,Goodwill etc. ASSESSMENT OF WORKINGCAPITAL REQUIREMENTS 1. Nature or character of business 2. Size of business/scale of operations

3. Production Policy 4. Manufacturing process/Length of Production cycle 5. Seasonal variations 6. Working capital cycle 7. Rate of stock turnover 8. Credit Policy 9. Business cycles 10. Rate of Growth of business 11. Earning capacity and dividend policy 12. Price level changes DIFFERENCE BETWEEN PLANAND POLICY A plan is a set out of actions that will beundertaken to achieve a goal. Plans givedirection to actions and ens ure that all actionsare moving towards stated goals. A policy is a set of guiding principles or rules which is framed to influence decisions andactions in implementation of plan that reflectsthe ult imate behavior of the organization. FINANCIAL POLICIES Definition : Criteria describing a corporation s choicesregarding its debt/equity mix, capita lstructure, method of financing investmentprojects, and hedging decisions with a goal of maximizing the value of the firm to some setof stockholders. ISSUES RELATED TO FINANCIALPOLICIES The Financial policies of a corporate mainly are related to thefollowing issues : 1. Sources of Finance 2. Capital Structure decision 3. Capital Budgeting 4. Dividend Decision 5. Working Capital Management 6. Financial Reporting 7. Financial Analysis

SOURCES OF FINANCE 1. Internal SourcePast Accumulated ProfitProvisions 2. External Source i)Ownership CapitalEquity SharesPreference Shares ii)Borrowed Ca pitalDebentures/BondsLoans and Credits COST OF RAISINGFUND/CAPITAL The cost of capital means cost of obtaining funds. A decision to invest in a particular project dependupon the cost of capital of t he firm or the cut off ratewhich is minimum rate of return expected by theinvest ors. It affects the market price of the shares of the firm. Higher the risk involved in a firm, higher the cost of capital. METHODS OF RAISING FUNDS Public Issue Right Issue Offer of Sale Private Placement Appointing Underwriter Borrowings Financial Plans and Policies Download this Document for FreePrintMobileCollectionsReport Document Report this document? Please tell us reason(s) for reporting this document Spam or junk Porn adult content Hateful or offensive If you are the copyright owner of this document and want to report it, please fo llow these directions to submit a copyright infringement notice. Report Cancel This is a private document. Info and Rating Reads: 1,061 Uploaded: 11/06/2009 Category: School Work Rated: Copyright: Attribution Non-commercial

Attribution_noncommercial Class Assignment made by Mr. Jagannath Pati, MFC IInd Yr., VISWASS, Bhubaneswar mfc_santosh Share & Embed Related Documents PreviousNext 1. p. p. p. 2. p. p. p. 3. p. p. p. 4. p. p. p. 5. p. More from this user PreviousNext 1. 24 p. 69 p. 1 p. 2. 12 p. 13 p. 14 p. 3. 16 p. 31 p. 7 p. 4. 14 p. 17 p. 29 p. Add a Comment Submit share: Characters: 400 Print This Document High Quality Open the downloaded document, and select print from the file menu (PDF reader re quired). Download and Print Add this document to your Collections This is a private document, so it may only be added to private collections. + Create a New Collection

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