Finance

Answer  1 Strategic planning can be defined as the planning that is done for the purpose of where the organization wants itself to be in the future (McNamara, n.d). Strategic planning differs from financial planning in the sense that strategic plans are the broad long-term plans designed to achieve the broader mission or goals of the organization. Whereas, financial planning simply refers to the planning done to control, borrow, invest, and lend money to modify the financial statements. When implementing the strategic plans, a company might face the problem of budget constraints or low budget to invest in a particular activity.

Answer  2  When preparing a cash budget, the information such as, total capital worth, investment opportunities, total estimated costs, hidden costs, revenue sources, etc. are needed. Operating budget simply refers to the budget that is allocated for certain operations, projects, or activities whereas, a cash budget estimates the cash inflow and outflow for the company. It is important for a company to prepare a cash budget because cash budgets can help them to evaluate if they have enough cash or not in order to fulfill the required activities or obligations.

Answer  3  Breakeven point is that point where the total costs are leveled off by the revenue earned. At this point, there is no profit and no loss. Breakeven point helps an organization to make certain decisions such as, predicting their sales or revenue in the future and acting accordingly, to alter the prices or supply of products for sales variation, and evaluating certain performance rations based on the past performance. An underperforming company can reach breakeven point by altering the prices and supply and increasing sales, issuing stocks, issuing bonds, or selling off unnecessary assets.