Correct Answer:
C. Both short and long term
Financial planning is a comprehensive process that involves setting financial goals, analyzing current financial resources, and developing strategies to achieve those goals. It is not limited to a single time horizon.
- The correct answer, Both short and long term, accurately reflects the scope of financial planning. Short-term planning focuses on immediate needs like liquidity, cash flow management, and operational budgeting (e.g., for the next year). Long-term planning involves strategic decisions such as capital budgeting for major investments, capital structure, and growth strategies, often spanning several years or decades.
- Options A (Short-term only) and B (Long-term only) are incomplete as they ignore crucial aspects of a company's financial health and future.
- Option D (No planning) is clearly incorrect, as effective financial management requires deliberate planning.
Integrated financial planning ensures a company's stability and sustainable growth across all timeframes.