Arrange the following steps involved in the process of financial planning in logical sequence.

(A) Sales forecast is made

(B) Requirement of fixed capital and working capital is estimated

(C) Expected profits are estimated

(D) Sources of finance are identified

Choose the correct answer from the options given below:

Option 1 -> This follows the logical flow: Sales forecast → Capital requirement estimation → Profit estimation → Identifying finance sources, which is the correct sequence in financial planning.

Option 2 -> This sequence is illogical as capital requirements cannot be estimated before making a sales forecast, and identifying sources before knowing expected profits doesn't follow standard planning.

Option 3 -> This is incorrect because expected profits cannot be estimated before making a sales forecast, as profits depend on projected sales revenue.

Option 4 -> This is wrong as it starts with profit estimation before sales forecast, which is not feasible since profits are derived from sales projections.

Hence, Option 1: (A), (B), (C), (D) -> In financial planning, the process begins with sales forecast (A) as it determines the business scale. Based on forecasted sales, the requirement of fixed and working capital is estimated (B). Then expected profits are calculated (C) using sales projections and cost estimates. Finally, sources of finance are identified (D) to meet the capital requirements. This sequential approach ensures realistic and organized financial planning. -> correct