(1)It helps in avoiding business shocks and surprises and helps the company in preparing for the future.

 (2) If helps in co-ordinating various business functions, e.g., sales and production functions, by providing clear policies and procedures. 

(3) Detailed plans of action prepared under financial planning reduce waste, duplication of efforts, and gaps in planning.

 (4) It tries to link the present with the future.

 (5) It provides a link between investment and financing decisions on a continuous basis.

 (6) By spelling out detailed objectives for various business segments, it makes the evaluation of actual performance easier.