Financial planning is the application of planning to various aspects of financial functions. Basically, business finance involves the formulation of financial plans stating the quantum of financial required, financing patterns and policies to pursue the financial plan administration. Business companies need short and long-term capital. The total capital required by fears is called capitalization. Short-term capital or working capital is the capital needed to fulfill daily liabilities or operational costs. Long-term capital is needed to obtain fixed assets. In general, in conservative land, some of the working capital are also filled with long-term capital.
The required capital can be collected from various sources. Substantial shares are increased from internally generated funds. The remaining parts are raised from outside sources such as stock and debt problems and loans. This financing pattern is known as a capital structure. It is designed in such a way as to get the required amount needed at the lowest possible cost. After the required amount is raised, the funds are allocated in the best way to get maximum benefits.
Applying the right control system can ensure efficient use of funds. Finally, important things are reported to top management to take the right action at the right time. Financial statements were analyzed to evaluate company performance. According to Cohen and Robin, business finance aims to determine the financial resources needed to meet the company’s operating program. Business finance also estimates the extent to which these requirements are met by the generation of internal funds and the extent to which they will be fulfilled from external resources. Business finance help build and maintain a financial control system that regulates the allocation and use of funds.