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    Dirre

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    Dirre

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    Der Dereje
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    19 views15 pages

    Dirre

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    Der Dereje

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 15

    Financial planning in

    Ethiopia
    Financial planning

    Definition
    A. Financial planning is the process of estimating the
    capital required and determining it's competition.

    B. It is the process of framing financial policies in


    relation to procurement , investment and
    administration of funds of an enterprise.
    C. It is a document containing a person's current money
    situation and long term monetary goal as well as strategies
    to achieve those goal.
    D. It begins with a thorough evaluation of the person's current
    financial state and future expectations .
    Objectives of financial planning
    Financial planning has got many objectives to look forward to:
    A. determining capital requirements_ This will be depend up on
    factors like:
    Cost of current and fixed assets
    Promotional expenses and long range
    planning.
    B. Determining capital structure.
    The capital structure is the composition of capital i.e.
    the relative kind and proportion of capital required in the business.
    This includes decisions of debt _equity ratio
    both short term and long term.
    C. Farming financial policies with regards to
    cash control, lending, borrowings, etc.
    D. Financial manager ensure that the scarce financial resource
    are maximally utilized in the best possible manner at least cost in
    order to gate maximum return on investment .
    Ethiopia's financial plan as over the past decade, been
    operating under a financial repression frame work used by
    the government for managing it's monetary and foreign
    exchange policy and financing of large infrastructure projects
    and state- owned-enterprise (SOEs).
    Instruments under this frame work include the central bank
    financing of the government ,state dominated banking sector
    mandatory financing of priority projects and directed credit,
    administrated interest rate captive domestic market for
    government debt, high liquidity and capital requirements.
    Process of financial planning in Ethiopia it has five
    simple steps:
    1. Know where you stand.(understand your current
    financial situation
    2. set your goals
    3. plan for the future
    4. managing money
    5. Review your plan.
    A. currently, the Ethiopian financial sector consists of
     3 public banks 1 including Development bank of Ethiopia (DBE
     16 private banks
     14 private insurance companies
     1 public insurance company
     31 micro finance institutions
     8200 saving credit cooperatives(SACCOs) in both rural and urban
    area
    Importance of financial planning
    Financial planning is process of
    Farming objectives
    Policies
    Procedures
    Program and budget regarding the financial activity of a
    concern.
    The importance can be outline as
    1: Adequate funds have to be ensured
    2: financial planning helps in ensuring a reasonable balance
    between out flow and inflow of funds so that stability is
    maintained.
    3: Financial planning ensures that supplies of funds
    are easily investing in company which exercise
    financial planning.
    4: Financial planning helps in making growth and
    expansion program which helps in long-run survival
    of the company.
    5: financial planning helps in reducing the
    uncertainties which can be a hindrance to growth of
    the company.
    6: Financial planning reduces uncertainties with
    regard to changing market trends which can be
    faced easily through enough funds.
    Components of good financial planning
    1. financial goal
    2.Net worth statement
    3.bugdet and cash flow planning
    4.debt management plan
    5.retirement plan
    6. Emergency funds
    7. Insurance coverage
    8. Estate plan.
    Thanks For Your
    Attention

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