Financial Planning and Analysis


An organization strategy, techniques and methods are heavily depending on financial planning and analysis. As it’s a core component of any business. So let us understand what is financial planning and analysis, what are financial planning and analysis roles and responsibilities, financial planning and analysis process flow chart to get the clear idea about it.

Financial Planning and Analysis Definition (FP&A):

Financial planning and analysis means it’s a process toward creating a solid financial plan, forecasting, budgeting and analytical reports that helps to maintain and improve its financial condition of an organization. Financial planning and analysis defines as consolidating information such as expenses and incomes, profit and loss, assets and liabilities for financial planning purpose. Whereas information such as liquidity analysis, working capital ratio, cash flow, solvency and stability analysis and various number of financial ratios and indicators for financial analysis purpose. It depends strongly on factual examination and statistical analysis to quantify and plan business activities and forecast their financial decisions. It additionally includes the utilization of benchmarks and correlations with comparable companies, to enable organizations to make strategies, methods along with decision for their business growth and increasing the valuation of their organization.

Importance of Financial Planning and Analysis:

  • The company has to verify that they accumulate the funds to the extend it is required. Too little fund allocation is bad plus excess of funds is also worst for any company.
  • How are all funds likely to be raised? Is business going to issue stocks, will likely that they take bank loan or issue debt? Since many organizations make use of mixture of all of these types of sources to funds to raise the capital.
  • At any given time, the company may have more than two investment proposals. They have to make a decision which is profitable and has your greatest opportunity of success. Then they can invest in a particular proposals.
  • Importance of financial planning and analysis ensures consistency of goals, aligning the development and growth objectives for the enterprise featuring its financial requirements.
  • Financial planning normally is the base for the financial control. Until their finance teams know how a much funds is allocated and also to which task. They cannot discover if they’re going under-budget or over-budget plan. Provided remedial action you need to take; these actions will be base for initiating corrective measures.
  • Each business face unforeseen cost, crisis situations as well as activities over that they do not have control. Emergency funds are essential in order to tide through such tough stages.
  • Company frequently choose typically which division gets just how much funds. All department including production, sales, marketing and advertising etc., will possess their finances to just how far they need. But should that they be given that funds they are asking for the?
  • Importance of financial planning and analysis furthermore supports the strategic development and growth of that the company, with taking into account risks, opportunities in new markets, capital budgeting estimates and more.

Financial Planning and Analysis Process Flow:

Here you can see the financial planning and analysis process flow chart for existing businesses and for new businesses to better understand it.

Financial Planning and Analysis Process Flow Chart for Startup and New Businesses:


Financial Planning and Analysis Process Flow Chart for Existing Companies and Businesses:

Importance of Financial Planning and Analysis Process Flow For Existing Companies - Wikipedia of Finance

Financial Planning and Analysis Roles and Responsibilities:

Financial planning and analysis role is very crucial and quite challenging. Here included are some of the roles and responsibilities of it.

  • Guiding that financial require and also necessity associated with organization.
  • Evaluating that efficiency of bonds, stocks, commodities, and other investment tools.
  • Generating decisions regarding market investment.
  • Examining the performance of securities of an organization.
  • Projection of the assets and sales forecasting.
  • Determining expenditure and future earnings of business organizations.
  • Evaluating the end result out of income tax rates, government policies, commodity pricing, competitor techniques and so on.

They deal with all the spreadsheets, balance sheet and also databases in order to build one much healthier insight into organization leads. A person with very good knowledge on economic, market trends as well as business situations, that they many times gives suggestions and recommendations with respect to buying as well as selling out assets, investment or any other securities.


One of the keys factor denoting a company’s existence and growth is the levels of revenue growths. There is a direct connection anywhere between making use of financial resources as well as the revenue generation for a business firm. It is a most important duty of financial planning and analysis to decide stability and financial health of an organization. They mainly assist in determining the future financial requirement as well as current financial position of a company.

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