Business SENIOR

HIGH
Finance SCHOOL

Self-Learning

Financial Planning Process Module

6
Quarter 3
Business Finance
Quarter 3 – Module 6: Financial Planning Process
First Edition, 2020

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Business SENIOR
HIGH

Finance SCHOOL

Self-Learning
Module

6
Quarter 3

Financial Planning
Process
Introductory Message

For the Facilitator:

Welcome to the Business Finance Self-Learning Module on Financial Planning

Process!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.
 For the Learner:

Welcome to the Business Finance Self-Learning Module on Financial Planning

Process!

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

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

At the end of this module, you are expected to:

1. define planning, management planning, and financial planning;
2. identity of the two phases of financial planning; and
3. enumerate the steps in the financial planning process.

PRETEST

Directions. Read the questions. Write the letter of your answer before the number.

______ 1. This is the step in the planning process where the mission and vision of
the company is created.
A. Identify resources C. Identify goal-related task
B. Set goals or objectives D. Establish evaluation system

______ 2. Which of the following actions is not included in the steps in financial
planning process?
A. Goal revision C. Set goals or objectives
B. Identify resources D. Identify goal-related tasks

_______3. Financial planning can be best defined as a process to make sure that
_________.
A. more jobs are created
B. the company is solvent
C. the company cash flow is positive
D. the resources are allocated and maximize profitability.

_______4. The learners are given an expectation of their output and the teacher
gives them a grade based on predetermined criteria. This refers to
what step of financial planning process?
A. Identify resources
B. Set goals or objectives
C. Identify goal-related tasks
D. Establish the evaluation system for monitoring and controlling

_______5. This is a step by step guide to creating a realistic organizational plan to

meet the set goals.
A. Planning C. Financial Planning
B. Budget Planning D. Management Planning
 RECAP
In your previous lessons about managing finances, how does a financial
system work? How do financial institutions provide finances for firms?

LESSON

Planning 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).

Management Planning is about setting the goals of the organization and identifying
ways on how to achieve them (Bombora & Cayanan, 2015).

Financial Planning is the process of estimating the capital required and determining
its competition. It is the process of framing financial policies in relation to about
procurement, investment, and administration of funds of an enterprise.

Two Phases of Financial Planning

Financial planning starts with long term plans which would then translate to
short term plans.

• Long-term financial plans

These are sets of goals that layout the overall direction of the company. A
long-term financial plan is an integrated strategy that takes into account various
departments such as sales, production, marketing, and operations for the purpose
to guide these departments towards strategic goals. Proposed outlays for fixed
assets, research and development activities, marketing and product development
actions, capital structure, and major sources of financing are considered. Also
included in the termination of existing projects, product lines, or lines of business,
repayment or retirement of outstanding debts, and any planned acquisitions (Gitman
& Zutter, 2012).
• Short-term financial plans

Specify short-term financial actions and the anticipated impact of those

actions. Short term financial plans include setting the sales forecast and other forms
of operating and financial data. This would then translate into operating budgets,
cash budget, and pro forma financial statements (Gitman & Zutter, 2012)

Long-Term Planning Short-Term Planning

Persons More participation from top Top management is still involved
Involved management but there is more participation from
lower-level managers (production,
marketing, personnel, finance, and
plant facilities) because their inputs
are crucial at this stage since they
are the ones who implement these
plans.

Time 2 to 10 years 1 year or less

Level of Less More
Detail
Focus Direction of the company Everyday functioning of the
company
Table 1: Comparison of Short-Term and Long-Term Planning (Gitman & Zutter, 2012)

Steps in Financial Planning Process

1) Set goals or objectives. In accomplishing a project, setting objectives increases
awareness of the chosen issue. Incorporations, long term and short term objectives
are usually identified. These can be seen in the company’s vision and mission
statements. The vision statement states where the company wants to be while the
mission statement states the plans on how to achieve the vision.

Examples of a company’s Vision-Mission statements are as follows:

Jollibee Foods Corporation (JFC)

Vision: To excel in providing great tasting food that meets local preferences
better than anyone. To become one of the three largest and most profitable
restaurant companies in the world by 2020.

Mission: To serve great tasting food, bringing the joy of eating to everyone.

McDonald’s Philippines

Vision: To respond to the fast-changing needs of the Filipino family. First

choice when it comes to food and dining experience. First mention as the ideal
employer and socially responsible company. The first to respond to the changing
lifestyle of the Filipino family.

Mission: To serve the Filipino community by providing great-tasting food and

the most relevant customer delight experience.
2) Identify resources. These include production capacity and workers who will
man the operations and financial resources (Borja & Cayanan, 2015).

3) Identify goal-related tasks. For a project to be done, the task is to prepare an

event to increase awareness of whatever issue you want.

4) Establish responsibility centers for accountability and timeline. Creating a

timeline helps in accomplishing a project. Likewise, forming different committees
also makes work easier. These are:

• Event Chairperson
• Budgeting Team
• Production Team
• Marketing Team
• Creatives Team
• Administrative Team

5) Establish the evaluation system for monitoring and controlling. The

management of corporations must establish a mechanism that allows plans to be
monitored. This can be done through quantified plans such as budgets and projected
financial statements. The management then compares the actual results to the
planned budgets and projected financial statements. Any deviations from the
budgets should be investigated.

6) Determine contingency plans. In planning, contingencies must be considered

as well. Budgets and projected financial statements are anchored on assumptions.
If these assumptions do not become realities, management must have alternative
plans to minimize the adverse effects on the company (Borja & Cayanan, 2015).
 ACTIVITIES

Directions. Identify the Phases of Planning evident in the following

scenarios. Write LTG for Long-Term Goal and STG for Short-Term Goal. Place
your answer on the space provided.

________ 1. Graduating from a university

________ 2. Taking a vacation in Boracay Island
________ 3. Passing the college entrance exam
________ 4. Starting a business
________ 5. Saving for retirement

WRAP-UP

In this lesson, you learned:

1. Why is planning important in achieving the goals of a company?
2. Who is responsible for setting goals for the company and identifying ways to
achieve them?
3. What are the plans to set? Are these for short term or long term?
4. What are the steps to follow in financial planning?

VALUING

1. Is success an accident?
2. Why do successful people tell you to plan if you want to be successful?
3. “If you don’t exactly where you’re going, how will you know to when you get
there?”
4. Do you think financial planning plays an important role in your everyday life?
 POSTTEST

Directions. Read the questions and encircle the letter of your answer.

1. This refers to an integrated strategic planning that takes into account various
departments where most of the participants are from top management.
A. Planning C. Long-Term Financial Plans
B. Financial Planning D. Short-Term Financial Plans

2. ____________ is a process that determines how a business will afford to achieve

its strategic goals or objectives.
A. Planning C. Long-Term Financial Plans
B. Financial Planning D. Short-Term Financial Plans

3. The vision and mission of Jollibee Food Corporation and McDonalds Philippines
are important parts of financial planning. In which step does it belong?
A. Identify resources C. Identify goal-related tasks
B. Set goals or objectives D. Determine contingency plans

4. Why does an organization or a company need to establish responsibility centers

or assign focal persons?
A. To offer help C. To achieve goals
B. To assist employees D. To show accountability and timeline

5. Which of the following is an example of a long term goal?

A. Buying a new house C. Shopping for new furniture
B. Buying new pair of shoes D. Booking for Asian tour
Post-Test Activity Pre-Test
1. C 1. LGT 1. B
2. C 2. STG 2. A
3. B 3. STG 3. D
4. D 4. LGT 4. D
5. A 5. LGT 5. D
1. D
KEY TO CORRECTION
 References
Business Finance Teachers Guide

https://en.wikipedea.org>wiki

https://www.corporatefinanceinstitute.com
https://www.goole.ph/search? financial
https://www.investopedia.com>ask
https://www.myaccountingcourse.com

https://www.mymoneycoach.com>

https://www.tutorialspoint.com>sales