Business Finance

Quarter 3 – Module 2:
The Financial Planning Tools
and Concepts
Introductory Message
This Self-Learning Module (SLM) is prepared so that you, our dear learners,
can continue your studies and learn while at home. Activities, questions, directions,
exercises, and discussions are carefully stated for you to understand each lesson.

Each SLM is composed of different parts. Each part shall guide you step-by-
step as you discover and understand the lesson prepared for you.

Pre-tests are provided to measure your prior knowledge on lessons in each

SLM. This will tell you if you need to proceed on completing this module or if you
need to ask your facilitator or your teacher’s assistance for better understanding of
the lesson. At the end of each module, you need to answer the post-test to self-check
your learning. Answer keys are provided for each activity and test. We trust that you
will be honest in using these.

In addition to the material in the main text, Notes to the Teacher are also
provided to our facilitators and parents for strategies and reminders on how they can
best help you on your home-based learning.

Please use this module with care. Do not put unnecessary marks on any part
of this SLM. Use a separate sheet of paper in answering the exercises and tests. And
read the instructions carefully before performing each task.

If you have any questions in using this SLM or any difficulty in answering the
tasks in this module, do not hesitate to consult your teacher or facilitator.

Thank you.
 What I Need to Know

This module is designed and written to help you to understand the

planning process.

After this module, you are expected to:

Identify the steps in the financial planning process (ABM_BF12-IIIc-d-10)
a. define financial planning;
b. explain the importance of financial planning; and
c. illustrate the financial planning process.

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 What I Know

A. Directions: Write the letter of the correct answer on a separate sheet of paper.

_______1. It includes the vision, mission, and goals set by the top level
of management.
A. tactical planning C. operational planning
B. strategic planning D. financial planning
_______2. It helps the company by translating the strategic plans into specific
plans or actions carried out by the middle level of management.
A. tactical planning C. operational planning
B. strategic planning D. financial planning
_______3. It involves day-to-day operations carried out by the
lower-level management.
A. tactical planning C. operational planning
B. strategic planning D. financial planning
_______4. It sets the company’s direction.
A. short-term goal C. mid-term goal
B. long-term goal D. none of the above
_______5. It describes what a company wants to become.
A. vision C. goal
B. mission D. objective

B. Directions: Arrange the financial planning process in order using Roman

Numerals (I, II, III, IV, V, VI). Write your answers on a separate sheet
of paper.

_______6. Assign the task to accountable and responsible individual or team and
have a timeline.
_______7. Identify the resources needed.
_______8. Identify goals that are related to the tasks.
_______9. Establish an evaluation system for monitoring and controlling.
_______10. Determine contingency plans.
_______11. Set goals or objectives.

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 Lesson

1 Financial Planning

Planning is very important because it provides directions to achieve the

organization’s objectives. Planning is useless without a strategy. Strategic planning
helps in achieving the company’s objectives. It is designed to guide the company in
operational and financial decisions. A strategic plan includes the vision, mission, and
goals set by the top level of management. This plan will be the basis of long-term
decisions. Tactical planning helps the company by translating the strategic plans
into specific plans or actions carried out by the middle level of management.
Operational planning involves day-to-day operations carried by the lower-level
management. This plan transforms the tactical plan into specific and
detailed objectives.

What’s In

Directions: Unscramble the following words to form the functions of a finance

manager. Write your answers on a separate sheet of paper.

1. ISTINVENG ________________________
2. ERANGOTIP ________________________
3. FINGNANCI ________________________
4. ENDIVIDD LIPIEOCS ________________________

To perform these functions, a finance manager should make a plan. Planning is

very important in every aspect of the business. It is related in every function of
management. The next lesson will be financial planning.

Notes to the Teacher / Facilitator

This module will help the students be familiar with the
steps in the financial planning process. It also aims to increase
their awareness about their goals or their future.

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 What’s New

Figure 1. Steps on Achieving Goals

To help you understand the steps in achieving goals, answer the following questions
in two (2) to three (3) sentences.

1. What are your goals in life?

_______________________________________________________________________
_______________________________________________________________________

2. How do you start setting goals?

_______________________________________________________________________
_______________________________________________________________________

3. Based on the goal ladder, how does setting goals lead to success?

_______________________________________________________________________
_______________________________________________________________________

Scoring Rubrics:

5 points The answer is well-written, organized and the idea is very relevant
to the question and has no grammatical or spelling errors.
4 points The answer is fairly written, and the idea is almost relevant to the
question and has one grammatical or spelling error.
3 points The answer is somewhat relevant to the questions and has two to
three grammatical or spelling errors.
2 points The answer is unclear and has four grammatical or
spelling errors.
1 point The answer does not address the question and has more than five
grammatical or spelling errors.

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 As you can see in the illustration, before you can reach your goals, there are
steps to do. These steps are the same as the process of financial planning. You must
identify the first step before you can go to the next level. Let’s begin!

What Is It

Financial planning is the process of deciding how an organization can

accomplish its financial goals and objectives. It is divided into:
1. the long-term financial plan, also known as strategic financial plan and
2. the short-term financial plan, also known as the operating financial plan.

Table 1. Comparison of Short-term Planning & Long-term Planning

Importance of Financial Planning

1. Financial planning helps managers assess the impact of the strategy or
actions on their company’s financial position, cash flows, and earnings and if
there is a need for additional financing.
2. It helps the company in the survival when uncertainties come along. Risks are
calculated and alternatives can be done. Through financial plans, the firm can
adapt to the changes happening in their environment.
3. It gives directions to the organization. Since plans are made, the firm can make
necessary actions.

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Steps in Financial Planning Process

Figure 2. The Financial Planning Process

1. Set goals or objectives. The goals of a company can be divided into:

• short-term goals (1 year)
• mid-term goals (3-5 years)
• long-term goals (5-10 years or even longer)
Long-term goals set the company's direction. Short-term goals are the specific
steps or actions that will ultimately achieve the company's long-term goals.
Vision describes what a company wants to become and mission is how the
company will achieve its vision.
2. Identify the resources needed. Resources comprise production capacity,
human resources, and financial resources.
3. Identify a goal that is related to the tasks. The management must find out how
to achieve the goal. For example, if they want to increase sales, they can train
their sales agent to become more skilled in dealing with clients. They can also
make sales promotions as a marketing strategy.
4. Assign the task to an accountable and responsible individual or team and have
a timeline. After identifying the task to achieve the goal, the company must
identify who will be accountable for the activity. There should be a specific
timeline for it.
5. Establish an evaluation system for monitoring and controlling. The
management must establish a process that allows them to supervise the plan.
This can be done by comparing the budgets and projecting financial
statements with the actual results.
6. Determine contingency plans. The management has alternative plans to
minimize the risk or bad effect to the company.

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 A contingency plan is an alternative plan of an organization to respond
efficiently to a future event or situation that may or may not happen. Budgets and
projected financial statements are also considered in contingency planning.

What’s More

Directions: Accomplish the following tasks. Write your answers on a separate sheet
of paper.

1. Define financial planning using your own words. (1 to 2 sentences)

_______________________________________________________________________
_______________________________________________________________________

2. Enumerate the different steps in planning.

1. ___________________________________________________________________
2. ___________________________________________________________________
3. ___________________________________________________________________
4. ___________________________________________________________________
5. ___________________________________________________________________
6. ___________________________________________________________________

3. Explain the importance of financial planning. (1 to 2 sentences)

_______________________________________________________________________
_______________________________________________________________________

Scoring Rubrics:

5 points The answer is well-written, organized and the idea is very relevant
to the question and has no grammatical or spelling errors.
4 points The answer is fairly written, and the idea is almost relevant to the
question and has one grammatical or spelling error.
3 points The answer is somewhat relevant to the questions and has two to
three grammatical or spelling errors.
2 points The answer is unclear and has four grammatical or
spelling errors.
1 point The answer does not address the question and has more than five
grammatical or spelling errors.

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 What I Have Learned

Directions: Answer the following questions in one (1) to two (2) sentences. Write your
answers on a separate sheet of paper.

In this lesson,

I learned that:

____________________________________________________________________________
____________________________________________________________________________

I did that:

____________________________________________________________________________
____________________________________________________________________________

I realized that:

____________________________________________________________________________
____________________________________________________________________________

Scoring Rubrics:

5 points The answer is well-written, organized and the idea is very relevant to
the question and has no grammatical or spelling errors.
4 points The answer is fairly written, and the idea is almost relevant to the
question and has one grammatical or spelling error.
3 points The answer is somewhat relevant to the questions and has two to
three grammatical or spelling errors.
2 points The answer is unclear and has four grammatical or
spelling errors.
1 point The answer does not address the question and has more than five
grammatical or spelling errors.

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 What I Can Do

Directions: Write an eight-line poem about financial planning and its importance in
your life as a student. Write your answers on a separate sheet of paper.

Rubrics
CATEGORY 5 4 3 2 1
ORGANIZATION The poem is The poem is The poem is The poem is The poem is
AND CONTENT easy to read, somewhat somewhat hard to read hard to read
organized easy to read, easy to read and few and most
and the organized and the elements are elements are
content is and the content is clearly nor clearly
relevant to content is somehow written and written and
the topic. almost relevant to drawn. drawn.
relevant to the topic Lack of
the topic. understandin
g of concept
SPELLING AND The poem has One spelling Two or three Four or five More than 5
GRAMMAR no spelling or or spelling or grammatical grammatical
grammatical grammatical grammatical mistakes in mistakes in
mistake. mistake in mistakes in the poem. the poem
the poem. the poem.

CREATIVITY The poem is The poem is The poem is The poem is The poem is
AND very creative, creative, somewhat less attractive not attractive
UNIQUENESS attractive and attractive and creative and at all.
unique unique. unique.

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 Assessment

A. Directions. Answer the following questions on a separate sheet of paper.

Choose the correct order of the financial planning process from the options
below. (6 points)
A. Assign the task to accountable and responsible individual or team and
have a timeline.
B. Establish an evaluation system for monitoring and controlling.
C. Determine contingency plans.
D. Set goals or objectives
E. Identify the resources needed.
F. Identify goals that are related to the tasks.

D, E, A, F, B, C D, E, C, F, A, B,

D, E, F, A, B, C D, E, B, C, A, F

B. Directions: Match column A with column B. Write your answers on a separate

sheet of paper.

COLUMN A COLUMN B
____1. It is about setting the goals of the A. short-term goals
organization and identifying ways on B. vision
how to achieve them. C. management
____2. It is the process of deciding how an planning
organization can accomplish its D. midterm goals
financial goals and objectives. E. mission
____3. It describes what a company wants F. planning
to become. G. long-term goals
____4. It describes how the company will H. financial planning
achieve its goal. I. contingency plan
____5. It is a plan designed to take a possible J. strategic plan
future event or circumstance
into account.
____6. These goals can be achieved in a year.
____7. These goals can be achieved between
1-3 years.
____8. These goals can be achieved in 5-10
years or even longer.

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 ____9. It provides road maps for guiding,
coordinating, and controlling the firm’s
actions to achieve its objectives.

Additional Activities

Directions: List at least 10 things you want to achieve in your life or any plans that
come into your mind. Identify whether each is a short-term goal or a
long-term goal. Write your answers on a separate sheet of paper.

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