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Financial planning Finance is the life blood of business.

Hence, finance functions is very important for the smooth and successful operation of a business. It is mainly concerned with the economic procurement and efficient utilization of funds. In order to achieve these goals, sound financial planning is absolutely necessary. A financial plan is an estimate of the amount of capital and its composition .it should be prepared in the light of the present and future development. The amount required for purchasing fixed assets and meeting working capital requirements is to be estimated. The requirement of funds for financing expansion and diversification is to be considered. Once the capital requirements are estimated, the next is to decide the types(such as equity shares, preference shares. debentures, term loans )and quantum of securities to be issued. The timing of issue of these securities is also to be determined. Further, the policies and procedures for the efficient administration of the plan are to be finalized.