Which framework is commonly used in financial planning?

The Time Value of Money (TVM) framework is fundamental in financial planning because it encapsulates the principle that a certain amount of money today has more value than the same amount in the future due to its potential earning capacity. This concept is crucial for assessing investment opportunities, calculating present and future values, and making informed decisions about financing and savings. By utilizing the TVM framework, financial planners can evaluate the worth of cash flows over time, enabling them to optimize investment strategies and retirement planning.

The other frameworks mentioned serve important roles in various aspects of financial analysis but do not capture the broad foundation of financial planning as the TVM framework does. For instance, while the Debt-to-Equity Ratio assesses a company's financial leverage and stability, it is not directly applicable for strategic financial planning on individual or corporate investment decisions. Cash Flow Analysis is vital for monitoring cash inflows and outflows within a business and understanding liquidity, but it does not inherently address the valuation of future cash flows. Break-even Analysis focuses on determining when revenues equal costs, which is useful for operational decisions but not necessarily for long-term financial planning.