Explain the importance of having a financial plan for this company. Give an imaginary plan to support your answer.
Importance of financial plan for the cpmpany
(i) Financial Planning ensures provision of adequate funds to meet working capital requirements.
(ii) It brings about a balance between in flow and out flow of funds and ensures liquidity throughout the year.
(iii) It solves the problems of shortage and surplus of funds and ensures proper and optimum utilisation of available resources.
(iv) It ensures increased profitability through cost benefit analysis and by avoiding wasteful operations.
(v) It seeks to eliminate waste of funds and provides better financial control.
(vi) It seeks to avail the benefits of trading on equity.
Explain the importance of having a financial plan for this company. Give an imaginary plan to support your answer.
Discuss about working capital affecting both the liquidity as well as profitability of a business.
‘S’ Limited is manqufacturing steel at its plant in India. It is enjoying a buoyant demand for its products as economic growth is about 7%-8% and the demand for steel is growing. It is planning to set up a new steel plant to cash on the increased demand it is facing. It is estimated that it will require about ? 5,000 crores to set up and about t 500 crores of working capital to start the new plant.
What is the role and objectives of financial management for this company?
Capital structure decision is essentially optimisation of risk-return relationship. Comment.
Keeping in mind that it is a highly capital intensive sector what factors will affect the fixed and working capital. Give reasons with regard to both in support of your answer.
What is meant by working capital? How is it calculated?
Discuss five important determinants of working capital requirements.
A capital budgeting decision is capable of changing the financial fortune of a business. Do you agree? Why or why not?
Explain the term ‘trading on equity’. Why, when and how it can used by a business organisation?