Tuesday, 27 August 2013

The Importance Of Financial Planning

The planning has to do with the establishment of one or more goals to achieve counting human and monetary resources, using them effectively and efficiently, to achieve the same, involving the establishment of policies and strategies to reach the desired goal.

To define the concept of finance from the point of view of the administration is studying the acquisition and management by a state company or individual, money and other values ​​of belonging, that is, about the conditions and opportunities in getting capital, use and liabilities for this.

The plan seeks to balance all levels of the company for the purpose of operating a balanced and efficient in their business and the environment within which it operates (break even).

This important tool allows a projection on the desired results to be achieved by the company, which handles financial information on sales, income, assets, investments and financing, based on production information and sales channels (marketing) in order to meet the financial requirements. 

This is to determine the time when the company found, ie where found, where you are now and where it is going, likewise if things are unfavorable to the company must have a strategy such support is not unprotected and financial alternatives. Their main source of information are the balance sheet (It's a summary of everything that has the company, you should, of what they owe and what really belongs to its owner, to a certain date) and the state Result (profit or loss as the case)

In the financial planning process the company must identify potential changes in operations so that they produce satisfactory results (sensitivity analysis).

In financial planning we talk about two important functions: planning and control. In planning considers the projection of sales revenue generated by you, the means of production, and the resources needed to achieve the established projections (targets). While control is the feedback and adjustments to ensure timely modification for the same unforeseen changes.

The basis for the planning and management control: the cost-volume-utility (CVU) this analysis determines the volume as an object, ie the volume is determined according to the desired operating income or fixed. The most used forms of cost-volume utility are:
  • Contribution analysis
  • Equilibrium analysis.

Total contribution margin is the difference between total sales and total variable cost.
The Contribution analysis is based on the foundation of cost variability - the identification and separate measurement of the fixed and variable components of cost and this can be by graphical method and analytical method.

Equilibrium analysis is defined here as the possibility that the actual amount is different than expected, "what if" that essentially asks how change an outcome if the original information is achieved predicted or if one of the underlying assumptions change.

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