Pros And Cons Of Financial Planning

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o Financial planning is the financial discipline which helps countries, companies (corporations) and persons (individuals) define their short, mid and long term financial strategies in order to achieve their financial targets. o Financial planning covers amongst others, risk management, asset allocation, tax planning just to name a few (other topics: retirement and estate planning) o in simple words, Financial planning helps determine the capital requirements for certain investments • Example: Why financial planning for a corporation: o A company needs to assess its financial capabilities continuously in order to invest in new products, hire new people, buy new assets, acquire other companies or buy new technologies to keep…show more content…
This money will be sp0ent during this period of time for the defined activity. This money could be allocated by a person, a corporation/company, a country/government. o When we talk about public budget, we generally refer to the same definition of budget as described before, but related to government/country/public administration. In this case, we mean by public budgeting, the expected incomes and expenses for a period of time (generally 12 months, i.e. a fiscal year). A fiscal year is not necessarily a calendar year (starts on January 1st and ends on December 31). o Public budgets are characterized by 2 important factors or components, namely Revenues and Expenditures  Revenues: funds that will be raised. • The types of funds raised depend on who is collecting these funds. • A government collects for example: Taxes (e.g. individual, corporate, social security, fuel) or Special taxes on certain products (e.g. tobacco, alcohol, etc)  Expenditures: funds that will be spent on various projects and…show more content…
There is much information which needs to be analyzed, by both parties. In ideal world, the parties involved in this transaction, have the same knowledge i.e. the same information. However, in real world, always one party will have more information than the other (e.g. the seller knows more than the buyer). In this case, we talk about asymmetric information. This could be harmful for one party, if the other is hiding information about a project (e.g. expected revenues) or a product (features, technology, etc) and taking advantage of the transaction. Nowadays, many experts are involved in transactions and tend to have access to all types of information, which lower the risk of asymmetric
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