Finance is the life blood of a business. Therefore, financial planning is of utmost significance to a businessman. Financial planning is concerned with raising funds and their effective utilization with a view to maximize the wealth of the company.

In spite of good financial plan, the desired results may not be achieved if there is no effective control to ensure its implementation. A budget is an important tool for financial planning and control. The budget represents a set of yardsticks or guidelines for use in controlling internal operations of an organization. The management, through budget, can evaluate the performance of every level of the organization. The discrepancy between planned performance & actual performance is highlighted through budgets.