12 SENIOR HIGH SCHOOL

BUSINESS FINANCE
Quarter 3 – Module 3
The Financial Planning Process

NegOr_Q3_Business Finance12_Module 3_v2

NegOr_Q3_Business Finance12_Module 3_v2

Business Finance – Grade 12
Alternative Delivery Mode
Quarter 3 – Module 3: The Financial Planning Process
Second Edition, 2021

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NegOr_Q3_Business Finance12_Module 3_v2

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.
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prepared for you.
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Please use this module with care. Do not put unnecessary marks
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Thank you.

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This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at our own pace and time. You will be enabled to process
the contents of the learning resource while being an active learner.

The module is intended for you to identify the steps in the financial planning process.

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Task 1
Direction:
Write True if the statement is correct and False if you think the statement is
wrong. Write your answers in your notebook.

1. Contingencies are also considered in planning.

2. Top management are responsible for tactical planning
3. Long term financial plans deal with the company’s over-all goals and directions.
4. Organizing provides road maps for guiding, coordinating, and controlling the firm’s
actions to achieve its objectives.
5. Short term plans will translate into long-term plans.
6. Top management are also involved in short term planning.
7. Tactical planning focuses on the everyday functioning of the company.
8. Outlay proposal of fixed assets is part of long-term planning.
9. To graduate from Senior High School with High Honors is a long-term goal.
10. To invest into business for a minimum of 12 years can also be considered as short-term
goal.

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 ’s In

Planning is very important in every firm or company. This can be long term or short-
term planning. Planning as defined, is an important aspect of the firm’s operations because it
provides road maps for guiding, coordinating, and controlling the firm’s actions to achieve its
objectives. (Gitman & Zutter, 2012)

Long term plans target long term goals. Long term goals are targets that every person
desire to achieve in the future. A very good example of a long-term goal is when you see
yourself having a stable job, graduate in a university, etc. Short term goals refer to objectives
that you need to achieve in order to meet the long-term goal. Examples are, to pass the exam,
to perfect a job interview, and etc.

Task 2
Direction: As a student, list down at least 3 long term goals and its corresponding short-term
goals. Copy the template below in your notebook.

Long term goal Short term goal

1
2
3

Example:
Long term goal Short term goal
To graduate high school with honors Pass all the exams with high scores
Submit all requirements on time

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 ’s New

Task 3
Answer the cross-word puzzle below. Write Down
your answer in your notebook. 1. A statement estimating the
amount of capital
1.
requirements and

2. determining its composition.

Across
1. Prediction
3. 2. A planning process of
estimating the capital required
and determining its
4. composition.
3. The availability of cash for
the concern whenever required.
4. Adjustments or the ability to
adjust.
is It

What is Financial Planning?

Planning, as defined, is a systematic way of deciding about and doing

things in a purposeful manner. It is very important for every organization to plan
as part of the management process. Planning is not merely looking up for things
to happen next, but it deals with many factors that an organization must foresee
in order to meet its short-term or long-term goals. One of the most important
planning methods that an organization must look into is financial planning.

Financial planning is the process of assessing the capital required,

defining its composition and the process of setting up financial policies
regarding purchasing, administration, and investment of funds of any business.

In financial planning, you need to have the financial plan that states the
capital requirement and its composition. This is very important for it contains
the funds required, when will it become available, how much is needed, how
much is to add, and how will these funds be used.

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Why is There a Need to Plan?

The following are the objectives of financial planning:

1. Determining capital requirements. In a business organization, it is very
important to determine how much capital is required, whether to start or
to introduce new projects in the organization. This will depend on the
costs of the assets, expenses and long-range planning.
2. Determining capital structure. This is the composition of capital. This
can be the relative proportion of capital required in the business.
3. Framing financial policies with regards to cash control, lending,
borrowings, and the like. These are the rules set especially in terms of
borrowing money from financial institutions so that the company can
control and monitor the liquidity of cash.
4. Ensures that the scarce financial resources are maximally utilized in
the best possible manner at least cost in order to get maximum
returns on investments.

Why is Financial Planning Important?

Financial planning is important because:

1. Adequate funds have to be ensured.
2. Financial planning helps in ensuring a reasonable balance between
outflow and inflow of funds so that stability is maintained.
3. Financial planning ensures that the suppliers of funds are easily investing
in companies which exercise financial planning.
(https://tinyurl.com/57rfjvu9)
4. Financial planning helps in making growth and expansion programs
which helps in long-run survival of the company.
(https://tinyurl.com/22384azf)
5. Financial planning reduces uncertainties with regards to changing market
trends which can be faced easily through enough funds.
6. Financial planning helps in reducing the uncertainties which can be a
hindrance to growth of the company. This helps ensuring stability and
profitability in concern.
(https://tinyurl.com/yckzfbvb, January 2016)

Financial planning provides flexibility –flexibility in objectives, policies, and

procedures to adjust according to the changing economic situations.

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How to Do Financial Planning?

The financial planning process do have the subsequent steps:

1. Set goals or objectives. this is often vital in planning. during this step you
wish to line what's your dream goal or what are the items that you simply
wanted to realize within the future.
Examples: you wanted to shop for a house, to travel round the world, or maybe
to possess your own luxury business.
2. Identify resources. Identifying resources means, you would like to search out
out what are the available assets that you just can use as your standing capital. as
an example, as a student, what are the assets you have? you've got your daily
allowance, your savings, or perhaps your gadgets. As long as these have values,
they will be used as a capital to begin a business.
3. Identify goal-related tasks. These are the items that you just have to waste
order to attain your goals. as an example, your goal is to graduate college and to
possess your business. The possible tasks may include; enrolling in a very
business course, studying hard, and begin investing.
4. Establish responsibility centers for accountability and timelines.
You need to line deadlines and you would like to be responsible along with your
own actions. you must take every action seriously, you wish to be accountable to
things that you just do, ensure that this may lead you in achieving your long-
term goal or plan.
5. Establish the evaluation system for monitoring and controlling.
Do forecasting or predicting the results of your actions. you'll be able to use a
chart and monitor your actions and objectives. Set priorities and proper timeline
to be properly organized in achieving your goals.
6. Determine contingency plans. Contingency plans are alternate plans.
These are vital because not all the time plans are successful. There are times that
you simply fail in your first plan, this can be the instant when your contingency
plan enters.

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 ’s More

Task 4
Direction: Do the activity below. Accomplish this using a clean sheet of paper.
1. Your sister is about to celebrate her 18 th birthday next month. You are
tasked by your mother to be the events coordinator of your sister’s
birthday party.

Required:
Create a financial plan for your sister’s 18 th birthday using the steps of the
financial planning process.

I Have Learned

Task 5
Direction: In your notebook, complete the following statements.

1. I have learned that _____________________________________________________

2. I have realized that _____________________________________________________
3. I will apply what I have learned ___________________________________________

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 I Can Do

Task 6
Direction: Using the steps in financial planning process, create a personal financial plan for a
young student like you. Use a diagram representing the process. Write your financial plan in
your notebook.

OUTSTANDING (20 pts)

Appropriateness: Fulfills or exceed all of the assigned content requirements.
Accuracy: Knowledge of the topic is accurate throughout.
Extensiveness: Exhibits convincing range and quality of data, having done appropriate research,
if applicable.
Perspective: the data presented reveals the understanding of the concept.
EFFECTIVE (15 pts)
Appropriateness: Fulfills the important content requirements of the assignment.
Accuracy: Knowledge of the topic is accurate throughout except in minor details.
Extensiveness: Seems informed on the topic, having done appropriate research, if applicable.
Perspective: the data presented reveals understanding of the concept
ADEQUATE (10 pts)
Appropriateness: Fulfills a number of the important content requirements of the assignment.
Accuracy: Knowledge of the topic is usually accurate, though flawed.
Extensiveness: Exhibits limited range or quality of information, having done minimal
appropriate research, if applicable.
Perspective: the data presented reveals partial understanding of the concept.
INEFFECTIVE (5 pts)
Appropriateness: Fails to deal with the important requirements of the assignment.
Accuracy: Knowledge of the topic is mostly inaccurate.
Extensiveness: Knowledge of the topic lacks range or quality.
Perspective: the knowledge presented reveals failure to grasp the concept.

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Direction: Multiple choice. Choose the letter of the correct answer. Write your answer in
your notebook.
1. Which step in the financial planning process when you establish targets that you want
to achieve in the future?
A. Establish responsibility centers for accountability and timelines.
B. Establish the evaluation system for monitoring and controlling
C. Identify goal-related tasks.
D. Set goals or objectives.
2. Which is not included in the financial plan?
A. Capital Requirement
B. Composition of the capital requirement
C. Contingency plan
D. None of the above
3. Below are descriptions of planning except for _______________.
A. Systematic b. Organized c. In-order d. Muddled
4. Which of the following is defined as the process of estimating the capital
required and determining its composition?
A. Planning
B. Financial planning
C. Financial Plan
D. Both b and c
5. Annie is dreaming of becoming a flight attendant someday, what will Annie do in
order to achieve her dream?
A. Take a course that is non-related to being a flight attendant.
B. Come to school late.
C. Study hard and practice speaking English fluently
D. None of the above.
6. Which comes first in the financial planning process?
A. Identify goal-related tasks.
B. Set goals and objectives
C. Establish system for monitoring and evaluation.
D. Determine contingency plans
7. Which is not an objective of financial planning?
A. None of the following
B. Frames financial policies
C. Determining capital structures
D. Determining capital requirements

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 8. Financial planning reduces uncertainties with regards to changing market
trends because?
A. Financial planning gives you less expenses.
B. Financial planning gives you estimates on future changes in costs.
C. Financial planning does not help the business’ needs.
D. None of the above.
9. Which of following is a reason why do investors invest to business that has quality
financial plan?
A. Because it gives investors assurance for higher ROI.
B. Because money is at stake.
C. Because good financial planning gives investors the idea on how the business
will be using the money in the company.
D. None of the above.
10. What do you call the plan devised for an outcome other than the usual plan?
A. Contingency plan
B. Strategic plan
C. Long-term plan
D. Short-term plan

Give some thoughts about this statement:

“Long term thinking and planning enhances short term decision making. Make sure you have
a plan of your life in your hand, and that includes that financial plan and your mission.”
– Manoj Arora, From the Rat Race to Financial Freedom

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References
Jerelleen A. Rodriguez, A.-H. B. (2016). Business Finance. Quezon City: Commission on
Higher Education.

Sailatha, D. K. (2016, August 9). Retrieved from Slideshare: https://tinyurl.com/yckzw735

Garcia, Nancy. 2 Financial Planning helps in ensuring a reasonable. n.d.

Accessed December 14,2021 https://tinyurl.com/57rfjvu9.

DeaconQuetzalMaster231. 4 Financial Planning helps in making growth. n.d.

Accessed, December 14, 2021https://tinyurl.com/22384azf.

Hrechyshkina, Olena. Financial Planning and Budgeting January

2016.Retrieved December 14, 2021. https://tinyurl.com/yckzfbvb,

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