Final answer:
Financial planning and analysis is key for resource allocation, marketing strategy development, and managing operations. It also provides crucial information for external investors and helps companies of all sizes in securing financial stability and making informed decisions.
Step-by-step explanation:
Financial planning and analysis is crucial for companies because it enables them to create a budget and allocate resources efficiently. This budgeting process is not only essential for managing day-to-day operations but also for developing effective marketing strategies and ensuring the company can cover its expenses. An established firm's financial information, such as products, revenues, costs, and profits, becomes increasingly important to outside investors like bondholders and shareholders, who may not know the managers personally but are willing to provide financial capital based on the company's financial health.
Moreover, sound financial planning and analysis are not limited to large corporations but are essential for businesses of all sizes. It involves not only sales forecasting but a wide range of activities, including risk management, investing in the company's financial future, and understanding banking institutions. Through a comprehensive plan, a company is better equipped to make informed decisions, manage economic success in both national and global economies, and secure financial stability.