Managing Financial Resources and Decisions

Managing Financial Resources and Decisions

Part A

Financial planning

Financial planning is a way of maintain control of financial future. Such planning helps evaluate the choices a business had and achieve desirable goals.  Financial planning is essential part of business; it is important for you to have as much information as possible about the financial future of the business so that contingency plans can be devised accordingly. Even if you start late, the planning will help you manage your finances and determine where you lie. A financial plan enables the company to know its current financial situation, set goals for the future and determine the strategies to achieve them (Swedroe, 2010). When preparing a financial plan, one must consider what will be the long-term needs and consider different situations that the business may have to confront later. 

The task of strategic financial planning is to create and maintain a balance between the objectives, financial resources and environmental conditions and create a forecasted financial performance for an extended period. In the planned economy, financial and economic planning of major economic entities by the state is essential by which financial resources are distributed the between areas and sectors under long-term goals and objectives of the state (Leimberg, 2007). Financial planning is a critical component of any organization seeking to make a profit.

Companies which take financial planning seriously often avoid future difficulties or are at least ready to face since they have already prepared themselves accordingly. It is the management of the financial resources of the company; the balance between revenue and expenditure flows, not only of the whole enterprise, but its main offices as well. If we look at financial planning from a practical point of view, the accuracy of the planning will be relative. It is impossible to immediately determine the specific costs of a structural unit, or on the contrary, the contribution of the various departments in the revenue buildup of the organization. The main objectives include first, the definition of investment and understanding further expenditures. Second, it is forecasting that determine sources and amounts of cash flows as well as their benefits. Finally, planning i.e. a constant control over the tasks meant to be done concerned mostly with departments such as accounting, finance, marketing and sales, and all the others that are part of the organizing scheme. Financial planning is a weapon of great importance that organizations have in the decision-making processes. For this reason, companies take this step very seriously and devote abundant resources (McKeown, 2012). The ultimate goal of this plan is a "financial plan" which lists and describes the company's financial tactics and also forecasts the future based on different accounting and financial statements of the same. However, there is no perfect plan to achieve the objectives; a near-optimal plan is made by trial and error processes. Financial planning also calls for efficiently disseminating information to the decision makers and other users of the information.

Specific Objectives of Financial Planning

Establish financial control and analyze the mutual interrelations ...