Financial Planning

Strategic Planning

Financial Planning
Strategic Planning Project Planning

Financial Planning
Strategic Planning Project Planning

Financial Planning

Corporate Planning
Strategic Planning Project Planning

Financial Planning

Corporate Planning Operational Planning

 Operational Planning

• forward planning of existing operations

• determines how to use current resources to attain

short-term and long-term objectives
 Project Planning

• relates to the use of schedules to plan and

subsequently report progress within the project
environment.
 Corporate Planning

• examines a business's internal capabilities and laus

out strategies how to use these capabilities to
improve the company and meet goals.
 Strategic Planning
• an organization's process of defining its strategy
and making decisions on allocating its resources to
pursue the strategy

• may also extend to mechanismsfor guiding the

implementation of the strategy
 Financial Planning

• a task of determining how a business enterprise

will afford to achieve its goals and objectives
The financial planning process is a logical, six-step
procedure:

(1) determining your current financial situation.

(2) developing financial goals.
(3) identifying alternative courses of action.
(4) evaluating alternatives.
(5) creating and implementing a financial action
plan, and.
(6) reevaluating and revising the plan.
Budgeting

A budget or spending plan is a road map for telling

your money what to do each month. At its simplest, a
budget lists how much income you have coming in,
compared to what's going out each month. Creating a
detailed and​ ​written budget allows you to make
smarter decisions with your finances on a daily basis.
Budgetary Control

Budgetary control is a system of procedures

used to ensure that an organization's actual
revenues and expenditures adhere closely to its
financial plan.
Master Budget
is an expensive business strategy that documents
expected future sales, productions levels, purchases,
future expenses incurred, capital investments, and
even loads to be acquired and repaid. In other words,
the master budget includes all other financial budgets
as wells as a budgeted income statement and balance
sheet.
 The master budget is basically management’s
strategic plan for the future of the company. Every
aspect of the company operations is charted and
documented for future predictions. You can almost
think of the master budget as a folder that includes
all of the other budgets including:
• Sales budget
• Merchandise purchases budget
• Production budget
• Manufacturing budget
• Selling budget
• General and Administrative expense budget
• Capital budgets
• Cash budgets
• Budgeted Financial Statements
Cash Budget
Cash Budget
helps to formulate in advance the payment and receipt
cycles of the business and thus it ensures that cash is readily
available to a business. By formulating cash budget, the
business can keep track of its accounts receivables and
accounts payable. In order to avoid shortage of cash, the
business can arrange its credit plans related to accounts
receivables and accounts payable accordingly.
Cash Forecast

A cash flow forecast is a projection of an

organisations future financial position based on
anticipated payments and receivables. The process
of deriving a cash flow forecast is called cash flow
forecasting.
Goals of Cash Flow Forecasting
The main goal of a cash flow forecasting is to assist
with managing liquidity within an organisation and
ensuring that the business has the necessary cash to
meet its obligations and avoid funding issues, essentially
better management of working capital.
Importance of Budgets
• Budgets Set Targets
• Strategy Requires Funding
• Budgets Communicate Priorities
• Control Spending
• Eliminate Turf Wars
• Provides a Profit Margin
Owner's Equity/Capital

equity is ownership of assets that may have

debts or other liabilities attached to them.
Equity is measured for accounting purposes by
subtracting liabilities from the value of an asset.
Dividends

A dividend is a method of redistributing a

company's profits to shareholders as a reward for
their investment
Retained Earnings

Retained earnings are the amount of money a

company has left over after all of its obligations
have been paid. Retained earnings are typically
used for reinvesting in the company, paying
dividends, or paying down debt.
 Effects of Dividends on Capital
Retained Other
Equity Earnings Accounts
Affected
A. Cash
- - Cash -
Dividends
B. Property
- - Asset -
Dividends
C. Stock
No Effect - Capital Stock -

D. Scrip
- - Liabilities +

E. Bonds
- - Liabilities +

F. Liquidating Capital Stock -

- ---
Bonds Asset -
Ploughing Back of Profits

The ‘Ploughing Back of Profits’ is a management

policy under which all profits are not distributed
amongst the shareholders, but a part of the profit is
‘Ploughed back’ or retained in the company.
Retained earnings or profits
are ploughed back for the
following purposes.

1) Purchasing new assets required for betterment,

development and expansion of the company.
2) Replacing the old assets which have become obsolete.
3) Meeting the working capital needs of the company.
4) Repayment of the old debts of the company.
Borrowed Capital
Borrowed capital consists of money that is
borrowed and used to make an investment. It
differs from equity capital, which is owned by
the company and shareholders. Borrowed
capital is also referred to as "loan capital"