Elements of liquidity plans and the importance for management decisions

The following explanation will help in understanding each finance function in detail Investment Decision One of the most important finance functions is to intelligently allocate capital to long term assets. This activity is also known as capital budgeting.

Elements of liquidity plans and the importance for management decisions

Wide Scope Why is a Product Important? According to William J. The word goods is also used frequently to mean product. So, the main responsibility of the management should be to know its product well.

In short, the importance of the product can be judged from the following facts: Product is the central point for all Marketing Activities Product is the pivot and all marketing activities revolve around it. Product policies decide the other policies. Thus, product is an end satisfaction of customers and the producer, therefore, must insist on the quality, size, etc.

The object of product planning is to earn maximum profits, to provide maximum satisfaction to the consumer and to make the best possible exploitation of the available resources of the enterprise. Some of the important definitions of product planning are as under: Tietjen According to William J.

On the basis of analytical study of above definitions, it can be concluded that product planning involves taking decisions with regard to: Which products must be produced or distributed by the enterprise?

Which new product must be developed? What kind of improvements and developments required in the product? What kind of expansion or contraction must be made in the product mix of the enterprise?

What must be the quantity of production? What must be the price of the products? Elements of Product Planning 1. It must decide on the characteristics of the product that can meet the requirements of the people. Possibility of production method What kind of production method would be followed and is it practicable to develop exactly what the consumer wants?

If it is possible to modify the existing line, then to what extent it should be done? Elimination in the product Product planning involves the decision of elimination of unprofitable product line so that the resources may be used to some products profitably.

Improvement in the product Product planning includes decision regarding the improvement of existing product in terms of quality, packing etc. Price Determination Determining the price of the product is one of the main elements of the planning.

This is an important decision to be taken by the management concerning product planning. It also provides for the attractive introduction of new products in the market. Coordination Product planning also attempts to coordinate the various products and their efforts so that the company can maintain or improve its competitive position.

It can be achieved by taking timely decisions from time to time. Thus, it is clear from the study of various elements of product planning that every decision from the start of an idea of producing to its execution from the product line forms the part of the product planning.

Importance of Product Planning 1. Starting Point for Marketing Programme All the decisions made of an enterprise are directly or indirectly affected by product planning. Therefore, it is necessary that product planning must be completed before preparing marketing programmes.

Elements of liquidity plans and the importance for management decisions

Can the product satisfy the needs and wants of consumers? Can the product face competition? Can the consumers pay the price for the product?

Can the enterprise earn desired profit? If the reply to all the above questions is affirmative, a decision is taken to produce it, or else, it is decided otherwise.PFP Chapter 1. STUDY. PLAY. An opportunity cost is.

Managing your liquidity Financing your large purchases Protecting your assets and income (insurance) Investing your money Planning for retirement The three elements of planning to protect your assets include ___ planning.

Financial management can be referred to as a branch of finance dealing with the managerial significance of the finance techniques. It involves planning, organizing, directing, and controlling the financial activities of a business firm, like procurement and utilization of the funds of the business firm.

The cash flow and its importance in the decision-making process The cash flow statement is a financial report that records a company’s cash inflows and outflows at a given time. It is one of the most essential elements in the financial management of a company since it is an important indicator of the firm’s liquidity.

There are maily 4 Finance Functions - Investment Decision, Financial Decision, Dividend Decision and Liquidity Decision. The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Role and Its Importance; Role of the Finance Function in the Financial Management for Corporates; Why Financial Innovation.

Liquidity Decision.

Elements of liquidity plans and the importance for management decisions

It is very important to maintain a liquidity position of a firm to avoid insolvency. Firm’s profitability, liquidity and risk all are associated with the investment in current assets.

In order to maintain a tradeoff between profitability and liquidity it is important to invest sufficient funds in current assets. Product planning is important because many decisions are taken in the process of product planning.

These decisions are — development of a new product, expansion or contraction of product mix, improvement in the product, determination of brand, label, packing, color, design, size and price, etc.

What is liquidity management? | Investopedia