2. • The goal of a firm should be to maximize the wealth of owners in the long run. This arises due to the complex nature of business operations such as, excessively over or under estimation of finance for a particular business operation. However, there are different kinds of financial statements for different purposes. Understand class expectations, learning objectives, and the road map we will follow to develop an ‘accounting’ tool belt. This limits the capacity of company to declare dividend. 1. • Capital structure affects both the profitability and the financial risk faced by a business. Cost of Public issue is more than the floatation cost of taking a loan. Higher the flotation cost, less attractive is the source of finance. We have provided Organising Class 12 Business Studies MCQs Questions with Answers to help students understand the concept very well. Risk Consideration: a. Importance of Financial Planning. (vii)Facilitates financial control. It provides policies and procedures for the sound administration of finance function. Various points of importance of financial planning are: Free PDF Download of CBSE Business Studies Multiple Choice Questions for Class 12 with Answers Chapter 9 Financial Management. Class 12 Business Studies Financial Management – Get here the Notes for Class 12 Business Studies Financial Management. Broadly we can divide the financial statements in two different types: General Purpose Financial Statements Special Purpose Financial Statements As said earlier that the basic objective of every […] 5. In fact, training in sports is useless if it is not well planned.2) To keep good control over all the activities: to keep a good control over all the activities is another objective of planning. A higher Debt service coverage ratio, in which the cash profits generated by the operations are compared with the total cash required for the service of debt and the preference share capital, the better will the ability of the firm to increase debt component in the capital structure. Hence, it helps in avoiding business shocks and surprises. Users can download CBSE guide quick revision notes from myCBSEguide mobile app and my CBSE guide website. Scale of Operations: An organization operating on large scale will require more inventory and thus, its working capital requirement will be more as compared to small organization. Financial plan begins with the preparation of strategic plans that in turn guides the formulation of operating plans and budgets. To ensure availability of funds whenever these are required: This includes a proper estimation of the funds required for different purposes such as for the purchase of long term assets or to meet day-to-day expenses of business etc. In the financial plan, activities are matched with the resources, equipment, and materials needed for … In this article, we will discuss the topic ‘Concept, Importance, Limitations and Process’ from the chapter ‘Planning’ out for Business Studies Class 12. (v)Helps to eliminate wasteful efforts. It is the preparation of financial blue print, which foresees entire fund requirement in respect to quantum as well as the timing. • Firm needs a judicious mix of debt and equity as : • Debt involves ‘Financial Risk‘ = risk of default on payment of interest on borrowed funds and the repayment of the principle amount whereas. (i)Helps in forecasting alternative business plans. (iv) Helps in avoiding wastage of finance In the absence of financial planning, wastage of financial resources may take place. 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Process 11. ... Financial Management is concerned with optimal procurement as well as usage of finance. What is meant by financial planning? iii. Introduction to Wal-Mart and their 2012 annual report. Thus, it helps in proper utilisation of funds. Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. (ii) To ensure unneccessary finance is not raised Excess funding is almost as bad as inadequate funding. NCERT Book for Class 12 Business Studies Chapter 9 Financial Management is available for reading or download on this page. Financial Strategies are preestablished plans of action to be implemented in specific situations. (short term = working capital Financial Management). Taxation Policy: A company is required to pay tax on dividend declared by it. Investment in all the current assets is called Gross Working Capital whereas the excess of current assets over current liabilities is called Net Working Capital. ix. or Financial planning is essential in financial management because: (Any two) • Primary objective: To maximize wealth of owners in the long run – Wealth Maximization concept. Financial Planning is process of framing objectives, policies, procedures, programmes and budgets regarding the financial activities of a concern. (iii) Helps in coordination It helps in coordinating various business activities, such as sales, purchase, production, finance, etc. Meaning of financial planning  Financial planning is the preparation of financial blueprint, which foresees entire fund requirement in respect to quantum as well as the timing. • The market price of shares is linked to three basic financial decisions: • Investment decision • Financing decision and • Dividend decision. • Cost of debt < cost of equity as lenders risk < owners risk. Collaboration: If companies are under collaboration, Joint venture, then they need less fixed capital as they share plant & machinery with their collaborators. Thus, it helps in proper utilisation of funds. 2. In simple terms objective of Financial Management is to maximize the value of firm, however it is much more complex than that.… 1. If the firm uses its debt potential, it loses the flexibility to use more debt. 7. CBSE Class 12 Case Studies In Business Studies – Financial Management. Check the below NCERT MCQ Questions for Class 12 Business Studies Chapter 10 Financial Markets with Answers Pdf free download. Check the below NCERT MCQ Questions for Class 12 Business Studies Chapter 5 Organising with Answers Pdf free download. Ans. The floatation cost may affect the choice between debt and equity and hence the capital structure. Ans. 4. PLANNING Planning: Definition ... Budget refers to a financial plan that is expressed in numerical terms. Explanation of Financial Planning - its meaning, Objective and importance from chp-financial management of class 12th Business Studies. Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. myCBSEguide | CBSE Papers & NCERT Solutions. Control Considerations: In case the existing shareholders want to retain the complete control of business then finance can be raised through borrowed funds but when they are ready for dilution of control over business, equity can be used for raising finance. Preference of Shareholders: While deciding about dividend the preference of shareholders is also taken into account. • Refers to the proportion of debt and equity used for financing the operations of a business. 2+ Multiple Choice Questions – Chapter Planning Business Studies 10+2 CBSE Students Presenting the Business Studies Class 12 Objective type questions with … The best app for CBSE students now provides Financial Management class 12 Notes Business Studies latest chapter wise notes for quick preparation of CBSE board exams and school based annual examinations. Period of Finance: For permanent capital requirement, Equity shares must be issued as they are not to be paid back and for long and medium term requirement, preference shares or debentures can be issued. • ‘Owners’ of a company are the shareholders. Return On Investment a. This ensures effective and adequate financial and investment policies. 1. (iv)Base for financial control It helps in providing the base for checking and comparing activities from the financial viewpoint. 3. Business Cycle: In the time of boom more production will be undertaken and so more working capital will be required during that time as compared to depression. (i) Helps in avoiding business shocks and surprises Proper provision regarding shortage or surplus of funds is made by anticipating future receipts and payments. Financial objectives are targets of an organization that can be expressed in monetary terms. CBSE Class 12 Business Studies Case Studies – Planning. Class 12 Business Studies Financial Management – Get here the Notes for Class 12 Business Studies Financial Management. A financial objective is a specific goal or target of relating to the financial performance, resources and structure of a business Cost minimisation is a common cost objective - particularly in relation to controlling the fixed costs of a business and, therefore, the break-even output. There are 15 questions in this test with each question having around four answer choices. (i) Helps in coordinating By providing clear policies and procedures, it helps in coordinating various business functions. Diversification: In case a company goes for diversification then it will require more fixed capital to invest in fixed assets like plant and machinery. or Growth Prospects: In case there are growth prospects for the company in the near future them it will retain its earning and thus, no or less dividend will be declared. But this objective attained its importance only since the Fourth Plan, when the plan aimed at elimination of the import of food-grains under PL480. The objective of financial planning is to ensure that enough funds are available at right  time. It is the process of estimating the fund requirements of business and specifying the sources of funds. Debt normally does not cause dilution of control whereas a public issue makes the firm vulnerable to takeovers. Following are the factors which affect working capital requirements of an organization: l. Nature of Business: A trading organization needs a lower amount of working capital as compared to a manufacturing organization, as trading organization undertakes no processing work. 5.What is meant by ‘financial planning’? (i) To ensure availability of funds whenever these are required This includes a proper estimation of the funds required for different purpose such as for the purchase of long-term assets or to meet day-to-day expenses of business, etc. (Delhi 2011 c) (iii) Proper utilisation of funds Finance acts as the life-blood for an organisation. Which of the following is untrue: (A) Common size Balance Sheet (B) Common size Statement of Profit and Loss (C) Common size Cash Flow Statement (D) None of the above 13. Working capital is of two types – Gross working capital and Net working capital. In fact, training in sports is useless if it is not well planned.2) To keep good control over all the activities: to keep a good control over all the activities is another objective of planning. State any three points of its importance. The Financial Management attempts to ensure utilization of funds in tune with the financial plans. Cost Of Equity a. when the company uses more debt, the financial risk faced by equity holders increase so their desired rate of return increases. CBSE Class 12. • Owners funds = equity share capital + preference share capital + reserves and surpluses + retained earnings = EQUITY, • Borrowed funds = loans + debentures + public deposits = DEBT • Capital Structure = The mix of long-term sources of funds. • Financing decisions involve: a) Decision whether or not to use a combination of ownership and borrowed funds. CBSE class 12 Business Studies Planning class 12 Notes Business Studies in PDF are available for free download in myCBSEguide mobile app. Save my name, email, and website in this browser for the next time I comment. Investment in fixed assets is for longer duration and they must be financed through long-term sources of capital. Free PDF download of Class 12 Business Studies Chapter 9 - Financial Management Revision Notes & Short Key-notes prepared by our expert Business Studies teachers from latest edition of CBSE(NCERT) books. Students (upto class 10+2) preparing for All Government Exams, CBSE Board Exam, ICSE Board Exam, State Board Exam, JEE (Mains+Advance) and NEET can ask questions from any subject and get quick answers by subject teachers/ … © 2020 myCBSEguide | CBSE Papers & NCERT Solutions, Revision Notes for class-12 Business Studies, Revision Notes for class-12 Computer Science, Revision Notes for class-12 Informatics Practices, Revision Notes for class-12 Physical Education, Nature and Significance of Management class 12 Notes Business Studies, Principles of Management class 12 Notes Business Studies, Business Environment class 12 Notes Business Studies, Organizing class 12 Notes Business Studies, Directing class 12 Notes Business Studies, Controlling class 12 Notes Business Studies, Financial Management class 12 Notes Business Studies, Financial Markets class 12 Notes Business Studies, Marketing Management class 12 Notes Business Studies, Consumer Protection class 12 Notes Business Studies, Free Online Test Series for CBSE Students, Case Study based Questions Class 10 Mathematics, CBSE Class 10 English Sample Paper 2020-21, How to add Subjective Questions in Online Tests, The Best Mobile App for CBSE and NCERT Syllabus. If debt is used beyond a point, cost of equity may go up sharply and share price may decrease in spite of increased EPS. To download Financial Management class 12 Notes Business Studies, sample paper for class 12 Physics, Chemistry, Biology, History, Political Science, Economics, Geography, Computer Science, Home Science, Accountancy, Business Studies and Home Science; do check myCBSEguide app or website. NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12. Dec 08, 2020 - Case Studies - (Chapter -4) Planning, BST Class 12 | EduRev Notes is made by best teachers of Commerce. a() Pervasive (b) Primary function of managementc() Continuous (d) Integrating4. (hots; Delhi 2008) (All India 2013) (HOTS; Delhi 2010 C, 2008; All India 2009) One of the very important objectives of Indian Planning is to attain economic self-reliance. Explain the meaning of financial planning. Planning …  or 5. To register Online Tuitions on Vedantu.com to clear your doubts. Ans. They provide liquidity to the business. Earnings: Companies having high and stable earning could declare high rate of dividends as dividends are paid out of current and paste earnings. The main objective of financial planning is that sufficient fund should be available in the company for different purposes such as for purchase of long term assets, to meet day-to- day expenses, etc. • Market price of a share will increase if benefits from a decision are greater than the cost involved in it. This is Business Studies class 12 Financial Management CBSE Questions & Answers. 1. To use a simple example, a best practice FP&A company will recognize the relationship between productivity and cost of goods sold (COGS). Free PDF download of Class 12 Business Studies Chapter 9 - Financial Management Revision Notes & Short Key-notes prepared by our expert Business Studies teachers from latest edition of CBSE(NCERT) books. For smooth functioning, it is required by every organisation. The following points highlight the  importance of financial planning: Tax Rate a. Download CBSE class 12th revision notes for chapter 9 Financial Management in PDF format for free. • Shareholders‘ funds involve no fixed commitment w.r.t payment of returns or repayment of capital. MCQs on other chapters like Principle of Management & more. 2. Div + Interest + Repayment obligation b. The cheapest source should be selected. • These are decisions w.r.t quantum of finance or composition of funds from various longterm sources. _____ is a comprehensive plan for achieving its objectives. CBSE class 12 Business Studies Financial Management class 12 Notes Business Studies in PDF are available for free download in myCBSEguide mobile app. The revision notes covers all important formulas and concepts given in the chapter. Apart from this, there is a need to estimate the time at which these funds are to be made available. MCQ Questions for Class 12 Business Studies with Answers were prepared based on the latest exam pattern. 3. … ‘Sound financial planning is essential for the success of any business enterprise’. (All India 2009) Students (upto class 10+2) preparing for All Government Exams, CBSE Board Exam, ICSE Board Exam, State Board Exam, JEE (Mains+Advance) and NEET can ask questions from any subject and get quick answers by subject teachers/ … Economic development is concerned with the increase in per capita income and causes behind this […] CBSE Class 12 Business Studies Revision Notes CHAPTER – 9 Financial Management class 12 Notes Business Studies. More risk is associated with borrowed funds as compared to owner’s fund as interest is paid on it and it is repaid also, after a fixed period of time or on expiry of its; tenure. The objective of financial planning is to ensure that enough funds are available at right time. • Ownership fund vs. Debt fund: They can be compared on the basis of factors such as examples, interest/dividend payout and repayment of principle, tax deductibility, and risk and floatation costs. Under it, the mix of share capital and debt capital is made in such a manner that cost of capital is reduced to minimum. State of Capital Markets: During boom, finance can easily be raised by issuing shares but during depression period, raising finance by means of debt is easy. 2. •bjectives of Financial Financial Management. Without proper planning, it is impossible to improve the performance of sportspersons. • It involves preparation of a financial blueprint of an organization. • To see that the firm does not raise resources unnecessarily: • Shortage of funds => firm cannot meet its payment obligations. The financial plan refers to the projection of future financial course of action to be carried for efficient execution of operating plans and effective accomplishment of corporate objective. b. Students can solve NCERT Class 12 Business Studies Financial Management MCQs Pdf with Answers to know their preparation … A firm must choose where to invest so as to earn the highest possible profits. This is possible only when you have the best CBSE Class 12 Business Studies study material and a smart preparation plan. Name the concept involved and explain three points of its importance. • Retained earnings= proportion of profits kept in, that is, reinvested in the business for the business. 7. • Estimate the time at which these funds need to be made available. The basic objective of any financial statement is to fulfill information needs of the intended users. 5. 2. We have provided Financial Markets Class 12 Business Studies MCQs Questions with Answers to help students understand the concept very well. 3. Students who are in Class 12th or preparing for any exam which is based on Class 12 Business Studies can refer NCERT Book for their preparation. Stability of Dividends: Companies generally follow the policy of stable dividend. CBSE Class 12 Case Studies In Business Studies – Planning. For example, during inflation prices of raw material, wages also rise resulting in increase in working capital requirements. 4. (vi)Provides a link between investment and financing decisions. Importance of Financial Planning. 2+ Multiple Choice Questions – Chapter Planning Business Studies 10+2 CBSE Students Presenting the Business Studies Class 12 Objective type questions with … • The term wealth refers to wealth of owners as reflected by the market price of their shares. This ensures effective and adequate financial and investment policies. • Capital Budgeting decisions – Long Term investment decisions, Factors affecting Investment Decisions/Capital Budgeting decisions. These notes will certainly save your time during stressful exam days. Debt service coverage ratio = Profit after tax + Depreciation + Interest + Non Cash exp. 3. Features And Limitations Of Planning. These free templates are designed for users with a wide range of experience levels, and offer professional quality along with simplicity. This is possible only when you have the best CBSE Class 12 Business Studies study material and a smart preparation plan. • On the basis of ownership, funds => owners funds + borrowed funds. It involves the preparation of a financial blue print of an organisation’s future operations. 5. 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