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BAC 819 :Financial Analysis - Financial Planning and Control Notes

Institution: Kenyatta University

Course: Master of Business Administration

Content Category: Lecture Notes

Posted By: Kipkiruikagawa

Document Type: PDF

Number of Pages: 26

Price: KES 200
 
    

Views: 381     Downloads: 1

Summary

Financial Planning and Control Notes

Meaning of financial planning
• Financial planning is the act of deciding in advance the financial activities that are necessary for the firm to achieve its primary or corporate goals.
There are two types of financial plans namely:
• Short term financial planning
• This involves a planning period of 12 months or less. Through such planning the firm ensures that:-
• It has enough liquidity/cash to pay for its obligations as and when they fall due
• Short term borrowing or lending are arranged to the firm’s best advantage.
• Long term financial planning
• This involves a planning period of five or more years. Long term plans look at the total capital investments of the sub units and divisions of the entire firm. This is also referred to as strategic or capital budgeting.

Key Tasks Financial Planning
• Assess the business environment
• Confirm the business vision and objectives
• Identify the types of resources needed to achieve these objectives
• Quantify the amount of resource (labor, equipment, materials)
• Calculate the total cost of each type of resource
• Summarize the costs to create a budget
• Identify any risks and issues with the budget set
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