CEVAP:

These plans contain the envisaged long term financial activities and they figure out the effects of these activities on the financial position of the company. Although the time frame covered is 2-5 years, 5 year strategic plans which are revised as the new data arrives are used generally. Typically the companies that have higher operational risk and short production cycles prefer shorter term planning horizons. Longer term plans are generally used by the purposes of Research and Development, marketing and new product development, fixed investments and basic financing. These plans are supported by annual budgets and profit plans.