Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the
vision
Vision, Visions, or The Vision may refer to:
Perception Optical perception
* Visual perception, the sense of sight
* Visual system, the physical mechanism of eyesight
* Computer vision, a field dealing with how computers can be made to gain und ...
and
objectives have been set. The
financial plan
In general usage, a financial plan is a comprehensive evaluation of an individual's current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans. This often includes a bud ...
describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the timeframes involved.
The financial planning activity involves the following tasks:
* 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.
The role of financial planning includes three categories:
# Strategic role of financial management
# Objectives of financial management
# The planning cycle
When drafting a financial plan, the company should establish the planning horizon, which is the time period of the plan, whether it be on a short-term (usually 12 months) or long-term (two to five years) basis. Also, the individual projects and investment proposals of each operational unit within the company should be totaled and treated as one large project. This process is called aggregation.
References
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External links
Prospective Analysis: Guidelines for Forecasting Financial Statements Ignacio Velez-Pareja, Joseph Tham, 2008
To Plug or Not to Plug, that is the Question: No Plugs, No Circularity: A Better Way to Forecast Financial Statements Ignacio Velez-Pareja, 2008
A Step by Step Guide to Construct a Financial Model Without Plugs and Without Circularity for Valuation Purposes Ignacio Velez-Pareja, 2008
Long-Term Financial Statements Forecasting: Reinvesting Retained Earnings Sergei Cheremushkin, 2008
Financial management
Investment
Corporate development