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Explain the factors affecting the formulation of a financial plan. |
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Answer» Financial plan deals with the deciding in advance about the future spending. The formulation of plan is affected by following factors: (i) Clarity of Objectives: A good financial plan has clearly defined objectives. The objectives are expressed in terms of money or quality of products, objects. Objectives are presented in simple words. (ii) Simple: A good financial plan is simple to understand and implement. It is made simple by considering various factors related with the enterprise. (iii) Flexibility: A good financial plan has a scope for making changes in the future. The plan is made flexible considering future obligations and future plans of the enterprise. (iv)Risk: A good financial plan keeps sufficient scope for the calculated risk rather to say it is made by keeping the level of risk of the enterprise. |
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