Identify the correct sequence of the process of financial planning from the options given below:

(A) The preparation of a sales forecast.

(B) Estimates showing expected profits are made to know how much fund requirements can be met internally.

(C) The preparation of financial statements.

(D) Estimation of the requirement for external funds.

Choose the correct answer from the options given below:

Option 1 -> Starts with sales forecast but estimates profits before preparing financial statements, which is illogical as you need statements to derive profit estimates.

Option 2 -> Follows logical flow: sales forecast → financial statements → profit estimates (internal funds) → external fund requirements. This is the correct sequential process.

Option 3 -> Begins with profit estimates before even forecasting sales, which is practically impossible. The sequence is incorrect.

Option 4 -> Prepares financial statements before sales forecast, which reverses the fundamental planning order. Cannot prepare statements without sales projections.

Hence, Option 2: (A), (C), (B), (D) -> The financial planning process logically begins with (A) sales forecast as the foundation, then (C) prepares financial statements based on projections, followed by (B) estimating expected profits to determine internal funding capacity, and finally (D) calculating external fund requirements to fill the gap -> correct