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  • Coursework 1011

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    JiaYing Win
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    Short-term financial planning focuses on ensuring a firm does not run out of cash and is often called cash budgeting, while long-term financial planning examines the implications of alternative strategies to avoid surprises and establish goals and performance standards. Financial institutions such as banks gather savings from individuals and reinvest them as loans or in markets, raising money through deposits, debt, and stock sales that is then lent to companies and individuals with sufficient interest to cover costs and compensate investors.

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    Short-term financial planning focuses on ensuring a firm does not run out of cash and is often called cash budgeting, while long-term financial planning examines the implications of alternative strategies to avoid surprises and establish goals and performance standards. Financial institutions such as banks gather savings from individuals and reinvest them as loans or in markets, raising money through deposits, debt, and stock sales that is then lent to companies and individuals with sufficient interest to cover costs and compensate investors.

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    17 views1 page

    Coursework 1011

    Uploaded by

    JiaYing Win
    Short-term financial planning focuses on ensuring a firm does not run out of cash and is often called cash budgeting, while long-term financial planning examines the implications of alternative strategies to avoid surprises and establish goals and performance standards. Financial institutions such as banks gather savings from individuals and reinvest them as loans or in markets, raising money through deposits, debt, and stock sales that is then lent to companies and individuals with sufficient interest to cover costs and compensate investors.

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    What is the difference between the Short - Term Financial Planning and the Long Term Financial Planning?

    ? Short-term financial planning where the focus is on ensuring that the firm does not run out of cash. Short-term planning is, therefore, often termed cashed budgeting. Long-term financial planning focuses on the implications of alternative financial strategies. It allows managers to avoid some surprises that cannot be avoided. And it helps to establish goals for the firm and to provide standards for measuring performance. List and describe the role of financial institutions. Financial institutions act as financial intermediaries that gather the savings of many individuals and reinvest them in loans or in the financial markets. For example, bank raises money by taking deposits and by selling debt and common stock to investors. They then lend the money to companies and individuals. Of course banks must charge sufficient interest to cover their costs and to compensate depositors and other investors.

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