Question:
Which of the following statements is not highlighting the importance of financial planning:
Which of the following statements is not highlighting the importance of financial planning:
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Effective financial planning ensures stability, resource optimization, and better decision-making for businesses.
Updated On: Feb 20, 2025
- It helps in forecasting what may happen under different business situations.
- It helps in avoiding business shocks and surprises and helps the company in preparing for the future.
- It provides a link between investment and financing decisions on a continuous basis.
- Detailed plans of action prepared under financial planning increase waste, duplication of efforts, and gaps in planning.
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The Correct Option is D
Solution and Explanation
Step 1: Understanding Financial Planning
Financial planning ensures the effective allocation of resources and minimizes risks associated with uncertainties.
Step 2: Identifying the Incorrect Statement
- (A) Financial planning helps businesses predict future scenarios.
- (B) It reduces financial uncertainties and business shocks.
- (C) It links investment and financing decisions for long-term stability.
- (D) The claim that financial planning increases waste and inefficiency is incorrect.
Conclusion: The correct answer is (mathbf{(D)}), as financial planning enhances efficiency rather than increasing waste.
Financial planning ensures the effective allocation of resources and minimizes risks associated with uncertainties.
Step 2: Identifying the Incorrect Statement
- (A) Financial planning helps businesses predict future scenarios.
- (B) It reduces financial uncertainties and business shocks.
- (C) It links investment and financing decisions for long-term stability.
- (D) The claim that financial planning increases waste and inefficiency is incorrect.
Conclusion: The correct answer is (mathbf{(D)}), as financial planning enhances efficiency rather than increasing waste.
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