Finance Ch 12
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The most important element in financial planning is_____ forcast.
If various asset categories increase, then ___ and ___ must also increase.
As the dividend ___ ratio increase the amount of earning available to finance new assets ___.
Retained earnings depend not only on next years sales and dividend payout ratio but also on ___ margin.
The amount of assets that are tied directly to sales, A
is often called the ___ intensity.
capital intensive industry will require large amounts of ___ capital to finance growth.
External or Additional
___ ___ ___ are funds a firm must raise externally through borrowing or by sell new common or preferred stock.
Addition Funds Needed
The faster a firms growth rate increases, the ___ the need for additional financing.
___ ___ ___ is defined as actual sales divided by the percentage of capacity at which fixed assets were operated to acheive those sales.
Full capacity sales
The ___ fixed ___ to ___ ratio is equal to the current year's actual fixed assets divieded by full capacity sales.
Current Year's Fixed Assets
Full Capacity Sales
The ___ level of ___ assets is equal to the target fixed assets to sales ratio times the projected sales.
Target Fixed Asset Ratio x Projected Sales
Corporate ___ set forth the specific goals that operatin managers are expected to meet.
A ___ statement is a condensed version of a firms strategic plan.
The corporate ___ defines a firm's line of business and geographic areas of operation.
Corporate ___ is a broad appproach developed for acheiving a firm's goals.
The ___ ratio is equal to 1 - the payout ratio.
1 - payout ratio
A ___ AFN indicates that surplus funds would be generated and available for investment.
___ of ___ occur when the ratio of a particular asset to sales will change as the size of the firm increases.
Economies of Scale
Technology dictates sometimes that fixed assets be added in large discrete units. These are called ___ assets.
The ___- ___ growth rate is the maximum acheivable growth rate without having to raise external funds.
Addition Funds Needed Formula
Required increase in assets - Increase in spontaneous liabilites - Increase in Retained Earnings.
S] - [(L
S] - S
x M x (1-POR)
Do not include notes payable in L
M = profit margin
POR = Dividend payout ratio
Finance Ch 12
Ch 12 Financial Planning Terms