Senior High School

Business Finance
Module 3:
Financial Planning Process

AIRs - LM
LU_Business Finance_Module 3
ABM – Business Finance
Module 3: Financial Planning Process
Second Edition, 2021

Copyright © 2021
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without written
permission from the copyright owners.

Development Team of the Module

Author: Gidenio A. Caoile

Editor: SDO La Union, Learning Resource Quality Assurance Team
Content Reviewer: Clarita C. Montemayor
Language Reviewer: Ronald June Balsomo
Illustrator: Ernesto F. Ramos Jr.
Design and Lay-out: Angela Pauline C. Ganuelas

Management Team:

Atty. Donato D. Balderas Jr.

Schools Division Superintendent
Vivian Luz S. Pagatpatan, Ph.D
Assistant Schools Division Superintendent
German E. Flora, Ph.D, CID Chief
Virgilio C. Boado, Ph.D, EPS in Charge of LRMS
Lorna O. Gaspar, EPS in Charge of ABM
Michael Jason D. Morales, PDO II
Claire P. Toluyen, Librarian II

Printed in the Philippines by: _________________________

Department of Education – SDO La Union

Office Address: Flores St. Catbangen, San Fernando City, La Union
Telefax: 072 – 205 – 0046
Email Address: launion@deped.gov.ph

LU_Business Finance_Module 3
 Senior High School

Business Finance
Module 3:
Financial Planning Process

LU_Business Finance_Module 3
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear learners, can
continue your studies and learn while at home. Activities, questions, directions, exercises,
and discussions are carefully stated for you to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you step-by-step as
you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in each SLM. This
will tell you if you need to proceed on completing this module or if you need to ask your
facilitator or your teacher’s assistance for better understanding of the lesson. At the end of
each module, you need to answer the post-test to self-check your learning. Answer keys are
provided for each activity and test. We trust that you will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are also provided to
our facilitators and parents for strategies and reminders on how they can best help you on
your home-based learning.

Please use this module with care. Do not put unnecessary marks on any part of this
SLM. Use a separate sheet of paper in answering the exercises and tests. And read the
instructions carefully before performing each task.

If you have any questions in using this SLM or any difficulty in answering the tasks in
this module, do not hesitate to consult your teacher or facilitator.

Thank you.

LU_Business Finance_Module 3
 Target

A financial planning process involves gathering your financial information,

setting life goals, examining your current financial status and coming up with a
strategy or plan for how you can meet your goals given your current situation and
future plans and reviewing this on an ongoing basis. It involves a series of steps that
outline how best to use money, investments and other assets to potentially achieve
financial goals. Most financial plans focus on savings goals, payoff goals and estate
planning goals to develop a roadmap to financial freedom.

Planning is an important aspect of the firm’s operations because it provides

roadmaps for guiding, coordinating, and controlling the firm’s actions to achieve its
objectives (Gitman & Zutter, 2012).

After going through this module, you are expected to attain the following
objectives:

Learning Competency:

• Identify the steps in the financial planning process (ABM_BF12-IIIc-d10).

Subtasks:

1. Define planning, strategic planning and tactical planning.

2. Enumerate the steps in planning.
3. Explain the importance of planning.

Before going on, check how much you know about this topic.
Answer the activities on the next page on a separate sheet of
paper.

1
LU_Business Finance_Module 3
 Jumpstart

Activity 1. Read and understand the questions below. Use separate sheet of
paper for your answers. It will be scored based on the following rubric:
5 points – the answer is complete
4 points – the answer is missing slight details
3 points – the answer is missing multiple details
2 points – content suggests a lack of preparation or comprehension
1 point - content only marginally related to the question/prompt

1. How do you see yourself five (5) years from now?

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_________________.
2. What do you think is/are the reason/s why you became successful in life?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_________________.
3. Are there any shortcut of success in life? Explain your answer.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_________________.

2
LU_Business Finance_Module 3
 Discover

Planning
• It is an important aspect of the firm’s operation because it provides road to
maps for the guiding, coordinating, and controlling the firm’s actions to
achieve the objectives (Gitman & Zutter,2012)
• Planning is very much related to another management function, controlling.
These two management functions reinforce each other, and both are very
important for the success of the organization.
• Management planning is about setting the goals of the organization and
identifying ways on how to achieve them (Borja & Cayanan, 2017).

Strategic Planning vs. Tactical Planning

Strategic Planning

• Strategic planning lays out the long-term, broad goals that a business or
individual wants to achieve.
• Your strategic plan provides the general idea of how to reach a goal, and the
tactical plan is where you lay out the steps to achieve that goal.
• Since the objectives set in the strategic plan are more general and evaluated
over a longer period of time, strategic planning typically occurs at the
beginning of a year, quarter, or month. Strategic plans should be reviewed
every quarter at least.
• A strategic plan supports the organization's vision and mission statements by
outlining the high-level plan to achieve both. Strategic plans generally provide
the broad, long-term picture. In order to develop strategic plans, top
management uses reports on finances, operations and the external
environment to project future actions. Strategic plans influence the
development of tactical plans.

Tactical Planning
• Tactical planning outlines the short-term steps and actions that should be
taken to achieve the goals described in the strategic plan.
• Tactical planning occurs after the strategic plan is outlined, and the tactical
plan can be reexamined on a more frequent basis — if need be.
• A tactical plan answers "how do we achieve our strategic plan?" It outlines
actions to achieve short-term goals, generally within a year or less. They are
much narrower in focus and can be broken down into the departmental or
unit level. Tactical plans outline what each department needs to achieve, how
it must do so and who has the responsibility for implementation.

3
LU_Business Finance_Module 3
 • As an example, an HR strategic plan may include the following two strategic
goals over the next five years with related tactical plans that include detailed
actions.

Strategic goal: Recruit, develop and retain a high-quality and diverse staff.

Tactical plan:

▪ Obtain salary survey data to benchmark the compensation of all positions.

▪ Conduct job fairs at local schools with diverse student bodies.
▪ Develop an effective exit interview program to understand why high-
performers leave the organization.
▪ Conduct an employee survey to gather data on job satisfaction and
engagement.
▪ Provide effective in-house training for managers and supervisors and identify
and allocate funds for external training.

Strategic goal: Implement flexible work arrangements.

Tactical plan:
• Identify the types of flexible work arrangements available and feasible for the
workplace.
• Survey employees to identify the flexible work arrangements of most interest.
• Create policies and procedures for the flexible work arrangements that are
implemented.
• Review the strategic goal and related policies and procedures annually to meet
changing circumstances.

Two Phases of Financial Planning

1. Long-term financial plans

• These are a set of goals that lay out the overall direction of the company.
• A long-term plan is an integrated strategy that takes into account various
departments such as sales, production, marketing, and operations for the
purpose of guiding these departments towards strategic goals.
• Those long-term plans consider proposed outlays for fixed assets, research
and development activities, marketing and product development actions,
capital structure, and major sources of financing. - Also included would be
termination of existing projects, product lines, or lines of business; repayment
or retirement of outstanding debts; and any planned acquisitions (Gitman &
Zutter, 2012).

2. Short-term financial plans

• Specify short-term financial actions and the anticipated impact of those
actions. Part of short-term financial plans include setting the sales forecast
and other forms of operating and financial data. This would then translate
into operating budgets, the cash budget, and pro forma financial statements
(Gitman & Zutter, 2012)

4
LU_Business Finance_Module 3
 Long-Term Short Term Planning
Planning
Persons More Top management is still involved but
Involved participation there is more participation from lower
from top level managers (production, marketing,
management. personnel, finance and plant facilities)
because their inputs are crucial at this
stage since they are the ones who
implement these plans
Time 2 to 10 years 1 year or less
Period
Level of Less More
Details
Focus Direction of the Everyday functioning of the company
company

Table 1. Comparison of Short-Term and Long-Term Planning

(Source: Gitman & Zutter, 2012)

Steps in Planning

A. Set goals or objectives.

• For corporations, long term and short-term objectives are usually identified.
These can be seen in the company’s vision and mission statements. The vision
statement states where the company wants to be while the mission statement
states the plans on how to achieve the vision.

B. Identify Resources.
• Resources include production capacity, human resources, who will man the
operations and financial resources. The materials needed, manpower,
machine, etc.

C. Identify goal-related tasks.

• Preparation in the accomplishment of the task. In this step, management
must figure out how to achieve an objective. For example, if the target for this
year is to increase sales by 15% tasks should be considered to achieve this
goal.

D. Establish responsibility centers for accountability and timeline.

• Assign or distribute tasks/role to the members. The management must
establish a mechanism which will allow plans to be monitored. This can be
done through quantified plans such as budgets and projected financial
statements.

E. Establish the evaluation system for monitoring and controlling.

• For corporations, the management must establish a mechanism which will
allow plans to be monitored. This can be done through quantified plans such
as budgets and projected financial statements. The management will then
compare the actual results to the planned budgets and projected financial
statements. Any deviations from the budgets should be investigated.

5
LU_Business Finance_Module 3
F. Determine contingency plans.
• In planning, contingencies must be considered as well.
• Budgets and projected financial statements are anchored on assumptions. If
these assumptions do not become realities, management must have
alternative plans to minimize the adverse effects on the company.

❖ The Characteristics of an Effective Plan for us to be guided in making an Effective

Planning.
❖ In planning, the goal of maximizing shareholders’ wealth must always be
put in mind.
The following criteria may be used for effective planning:
• Specific – target a specific area for improvement.
• Measurable – quantify or at least suggest an indicator of progress.
• Assignable – specify who will do it.
• Realistic – state what results can realistically be achieved, given
available resources.
• Time-related – specify when the result(s) can be achieved

6
LU_Business Finance_Module 3
 Explore

Activity 2. Arrange the jumbled letters in the box to form the correct word.
Write your answers ONLY on a separate sheet of paper.

1. G O L A S
A
2.
E M I T L I E N

3. I D N E I T Y F
Y Y
4. N G I N L N A P
F

5. E R O U S R S E C
S
6. Y C N G E N T I O N C
7. E
N G I O L L R T O N C
N N
8. S O H T R E R T M

9. T N G E E E A A N M
N O T N
10. T R
N E M G O N L
R
Activity 3.
T Fill in the blanks. Use the formed words above to
complete/answer the items that follows. Write your answer ONLY on a
separate sheet of paper.
1. Determine __________________ plans. It is the sixth steps in planning.

2. What do you call an integrated strategy that takes into account various
departments such as sales, production, marketing, and operations for the
purpose of guiding these departments towards strategic goals? ______________
3. Establish the evaluation system for monitoring and ____________________.
4. Production capacity, human resources, who will man the operations and financial
resources are included in ________________.
5. Setting the goals of the organization and identifying ways on how to achieve them
is _____________ planning.
6. Establish responsibility centers for accountability and _________________.
7. Financial plans which include setting the sales forecast and other forms of
operating and financial data are referred to as ______________________.
8. The first step of planning is all about setting of ___________________.
9. Controlling is very much related to another management function, _____________.
10. How do we call goal-related tasks which aid the management to figure out how to
achieve an objective? ________________

7
LU_Business Finance_Module 3
 Deepen

At this point, you’re going to apply the Steps in Planning. Group

yourself in five (5) and make a write-ups in Event Planning. Assign tasks to
each member of the group. Use separate sheet of paper.

1. EVENT PLANNING

• Description of the Activity

- This is a simulation of conducting a campaign event beginning from inception
(planning stage) to actual performance (execution).
- The learners as the event coordinators and performers for the event (i.e. the learners
will act as the celebrities/dancers/singers who are part of promoting the cause of
the event.)

Objective/s:
• Inform the learners that this section aims to let them experience the
planning process in a simple activity given a short amount of time and
resources.

At the end of this activity, they will be able to:

• Organize a small classroom event given the limited time and resources in the
class.
• Perform the functions of planning and implementing plans under a
controlled set up.
• Evaluate result of event based on a predetermined criteria.

What you need:

• Cartolina or ¼ Manila paper
• Bond papers (5)
• Colored papers or Art papers
• Tape
• Glue
• Pencils
• Markers
• Pens
• Crayons
• Mechanics
• All of the following should be present during the event proper:
• Event title and campaign slogan (Example: Existence: Cut the Greed, Not the
Green, a benefit concert to save endangered forests)
• Campaign paraphernalia (posters/brochures) containing the following:
‣ Title of the event
‣ Date and time
‣ Campaign slogan
‣ Vision Statement (Example: To save the endangered Philippine Forest)

8
LU_Business Finance_Module 3
 ‣ Mission Statement (Example: To increase awareness of deforestation by
organizing events that emphasize on tree planting)

Position Description Short term Planning

Event Oversees the functions of the • Event title and slogan
Chairperson other committees. Must be able to • Mission and vision of the
set the overall direction of the campaign
group.
Administrative Responsible for other functions
Team that the Event Chairperson
deems necessary. This may
include stage direction, event
conceptualization, crowd control,
back stage organizer, etc.
Budgeting Team Responsible for the allocation of •Record of goods and
the given s to make the event services purchased
possible. •Documentation of timeline
They will also negotiate with the of activities done during the
facilitator regarding prices of the planning and execution
required materials. stage.
Production Team Responsible for organizing the •Song/dance number
performances to be presented incorporated in the
during the event. This includes campaign
role playing as the celebrities who •Not all need to present.
will perform in the campaign Some may just
event. choreograph.

Responsible for the presentation • Persuasive/

that would persuade the audience informative speech
to join the campaign initiative. incorporated in the
Tip: Emphasize on the campaign. May be done in
importance of the campaign, how between song/dance
the audience can be involved and numbers
what would they get from • Not all need to present.
supporting the campaign. Some may just formulate
the script.

Creative Team Responsible for the production of •Whole cartolina campaign

the campaign paraphernalia. The poster
posters and brochures should be •Whole bond paper
able to catch the attention of the campaign pamphlet
target audience.

What you need to do:

In 20 minutes, come up with an event to raise awareness of either of the following

suggested issues:
• Proper Waste Segregation
• Anti-Smoking Campaign
• Barangay or Community Cleaning
• Dengue Prevention
• Community Image Improvement

9
LU_Business Finance_Module 3
The following are available:

Venue
• Center of the Community Plaza – PHP150,000 (Restrictions: Performance
must include singing)
• Concert grounds – PHP200,000 (Restrictions: None, any type of performance
is allowed)
• School Auditorium – PHP100,000 (Restriction: Performance must include
dancing)
• Basketball Court – PHP90,000 (Restriction: Performance must include a
song and dance number)

Materials – may be used for posters, stage design, and other campaign
paraphernalia.

‣ Cartolina – PHP50,000 each

‣ Marker – PHP10,000 each
‣ Pencil – PHP5,000 each
‣ Pens – PHP7,000 each
‣ Crayons – PHP5,000 each stick
‣ Tape – PHP8,000 per roll
‣ Glue/paste – PHP3,000 per bottle/tube
‣ Colored papers – PHP5,000 per piece
‣ Bond Papers – PHP10,000 per piece

Special Guest (to be role played by the learners from the productions team)
• Kathryn Bernardo and Daniel Padilla – PHP200,000 (Restrictions: None,
may perform anywhere)
• Nadine Lustre and James Reid – PHP100,000 (Restrictions: Will not
perform in a basketball court or school auditorium)
• Maine Mendoza and Alden – PHP150,000 (Restrictions: Will not perform in
a basketball court)
• Jolina Magdangal and Marvin Agustin – PHP90,000 (Restrictions: Will not
perform in a school auditorium)

Budget Total: PhP300,000.00

10
LU_Business Finance_Module 3
 2. Evaluation Criteria for Scoring:

Score Points Criteria

Content 40% 40-33 Excellent to Very Good: The objective was clearly met. It is
supported by details and functions of every person involved were
clearly presented.
32-35 Good to Adequate: The objective was clear but supporting
information is general. Supporting details are relevant, but one
or more key issues is unsupported.
Fair to Poor: The objective was somewhat clear but more
24-17 supporting details are needed. Inconsistent substantiation of
claim. Supporting details and information are somewhat
relevant, but key points are unsupported.
Failing: Vague or unclear objectives. Inadequate learning of
subject matter. Supporting details are a seemingly random
16-0 collection of information, unclear, or not related to the topic.
Organization 30-25 Excellent to Very Good: Clear Organization. Parts are in logical
30% order and minimum requirements were met.
Good to Adequate: Clear organization. Parts are in logical order
24-19 but some of the requirements were not met.
Fair to Poor: Significant lapses in organization. Some parts are
not in logical or expected order and some requirements were not
18-13 met.
Failing: Poor, hard-to-follow organization. The parts are not in
12-0 logical order and the minimum requirements were not met.
Style 20% 20-18 Excellent to Very Good: Extremely fluent and articulate in
relation of ideas and effective language used. The format was
strictly followed.
Good to Adequate: Reasonably fluent in relation of ideas;
17-14 attempt language used is somewhat effective. The format was
strictly followed.
Fair to Poor: Written ideas was unclear and inappropriate
language used. The format was not properly observed.
13-10 Failing: Incoherent relation of ideas; essentially no thought
behind language used. The format was not strictly followed.
9-0
Mechanics 10-9 Excellent to Very Good: Few errors in format, formulation of
10% slogan, mission and vision statement, functions and
computations of budget.
Good to Adequate: Occasional errors in format, formulation of
8-7 slogan, mission and vision statement, functions and
computations of budget.
6-5 Fair to Poor: Frequent errors in format, formulation of slogan,
mission and vision statement, functions and computations of
budget.
Failing: Dominated by errors in in format, formulation of
slogan, mission and vision statement, functions and
4-0 computations of budget.

Total Score:
100

11
LU_Business Finance_Module 3
 Gauge

Directions: Read each item carefully. Use separate sheet of paper for your answers.
Write only the letter of the best answer for each test item .

1. It quantify or at least suggest an indicator of progress.

A. Assignable B. Measurable
C. Realistic D. Specific

2. Which of the following is the characteristic of Long-term planning?

A. The level of details is less.
B. The time period is 1 year or less.
C. Focus on everyday functioning of the company.
D. There is more participation from lower level managers.

3. What step in planning where it assigns or distributes task to the members?

A. Set goals or objectives.
B. Identify goal-related tasks.
C. Establish responsibility centers for accountability and timeline.
D. Establish the evaluation system for monitoring and controlling.

4. What step in planning where alternative options must be into consideration?

A. Identify Resources
B. Set goals or objectives
C. Identify goal-related tasks
D. Determine contingency plans

5. It sets the goal that lay-out the overall direction of the company.
A. Long-term planning B. Short-term planning
C. Long-term financial plan D. Short-term financial plan

6. It is the step in planning which determines the manpower, materials, machines,

etc. needed in the operations.
A. Identify Resources
B. Set goals or objectives
C. Identify goal-related tasks
D. Determine contingency plans

7. It is a characteristic of an effective plan where it specifies who will do the task.

A. Assignable B. Measurable
C. Realistic D. Specific

8. Which of the following is a characteristic of a Short-term financial plan?

A. It guides various department towards formulating strategic goals.
B. An Integrated strategy that takes into account various departments.
C. It includes setting the sales forecast and other forms of financial data.
D. Proposed outlays for fixed assets, research and development activities.

12
LU_Business Finance_Module 3
9. It refers to setting the goals of the organization and identifying ways on how to
achieve them.
A. Planning B. Event planning
C. Management planning D. Short-term planning

10. Which of the following characteristics of effective plan that target a detailed area
for improvement?
A. Measurable B. Realistic
C. Specific D. Time-related

13
LU_Business Finance_Module 3
LU_Business Finance_Module 3
14
JUMPSTART: Activity 1
1. Being an Accountant, Engineer, Teacher, Businessman, other Professions
2. I studied hard, finished my schooling, well planned goals, hard work,
perseverance and determination in attaining my goals in life.
3. No, there is no such thing as a short-cut of success in life. It needs a lot of
hardwork, determination and perseverance to be success in life.
Explore: Activity 2 Activity 3:
1. GOALS 1. CONTINGENCY
2. TIMELINE 2. LONG-TERM
3. IDENTIFY 3. CONTROLLING
4. PLANNING 4. RESOURCES
5. RESOURCES 5. MANAGEMENT
6. CONTINGENCY 6. TIMELINE
7. CONTROLLING 7. SHORT-TERM
8. SHORT-TERM 8. GOALS
9. MANAGEMENT 9. PLANNING
10. LONG-TERM 10. IDENTIFY
Deepen: Event Planning Output:
In the write-ups the following criteria should be observed.
Sample Output:
1. ‣ Title of the event: Existence
‣ Date and time: February 14, 2021 at 6pm
‣ Campaign slogan: Cut the Greed, Not the Green, a benefit concert to
save endangered forests
‣ Vision Statement (Example: To save the endangered Philippine Forest)
‣ Mission Statement (Example: To increase awareness of deforestation by
organizing events that emphasize on tree planting)
‣Venue: PCNHS Auditorium
2. Illustration and design Campaign poster and slogan in the cartolina and use
coupon bond for the pamphlet.
3. Integrate appropriate music like “Kapaligiran” or a composed song to create
awareness for the event.
4. The responsibility of the event team should be properly presented.
5. Budget should be allocated properly in the event.
6. An alternative or suggestion in case the plan original plan did not
materialize.
Gauge:
1. B 2. A 3. C 4. D 5. C 6. A 7. A 8. C 9. C 10. C
Answer Key
References
BOOKS:

• Cayanan, Arthur S and Borja, Daniel Vincent H. (2017). Business Finance.

Manila, Philippines: Rex Bookstore. pp. 49-52.

• Gitman, Lawrence J. Principles of Financial Management. New York: Pearson

2012.

• K to 12 Senior High School Accountancy, Business and Management Strand

– Business Finance May 2016.

LINKS:

• Steps in Planning: https://Investopedia.com/terms

• Characteristics of Planning: https://Investopedia.com/terms

• Difference between strategic and tactical planning:

https://www.shrm.org/resourcesandtools/tools-and-samples/hr-
qa/pages/couldyouexplainthedifferencebetweenstrategicandtacticalplansand
giveexamplesofeach.aspx

• Strategic vs Tactical Planning: https://blog.hubspot.com/sales/strategic-vs-

tactical-planning

15
LU_Business Finance_Module 3
 For inquiries or feedback, please write or call:

Department of Education – SDO La Union

Curriculum Implementation Division
Learning Resource Management Section
Flores St. Catbangen, San Fernando City La Union 2500
Telephone: (072) 607 - 8127
Telefax: (072) 205 - 0046
Email Address:
launion@deped.gov.ph
lrm.launion@deped.gov.ph

16
LU_Business Finance_Module 3