Question:easy

The process of estimating the fund requirements of a business and specifying the sources of funds is called

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Remember: "Estimating requirements" and "Specifying sources" are the twin pillars of Financial Planning.
Updated On: Jun 25, 2026
  • Trading on Equity
  • Capital Budgeting decision
  • Financial Management
  • Financial Planning
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The Correct Option is D

Solution and Explanation

Step 1: Break down the key phrase in the question.
The question asks about the process of (i) estimating how much money a business needs, and (ii) identifying where that money will come from (sources of funds).
Step 2: Review Trading on Equity.
Trading on Equity means using debt financing to increase the returns for equity shareholders. It is not about estimating fund requirements.
Step 3: Review Capital Budgeting Decision.
Capital budgeting involves selecting which long-term investment projects to fund (for example, buying machinery or expanding a plant). It is a specific investment decision, not a broad fund-estimation process.
Step 4: Review Financial Management.
Financial Management is the broad concept that covers all decisions related to acquiring and using funds efficiently. It is the umbrella term, not the specific process described in the question.
Step 5: Review Financial Planning.
Financial Planning is the process of estimating the total funds required by a business and laying out a plan specifying the sources from which those funds will be raised. It is like a financial blueprint for the future.
Step 6: Match to the question and confirm.
The question directly describes Financial Planning: estimating fund requirements and specifying sources.
\[ \boxed{ \text{(D) Financial Planning} } \]
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