IM Chapter 4 Long term Financial Planning and Growth

IM Chapter 4 Long term Financial Planning and Growth -...

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CHAPTER 4 LONG-TERM FINANCIAL PLANNING AND GROWTH SLIDES CHAPTER WEB SITES Section Web Address 4.1 www.investor.reuters.com finance.yahoo.com 4.2 www.jaxworks.com www.planware.org End-of-chapter material www.mhhe.com/edumarketinsight www.dupont.com www.caterpillar.com CHAPTER ORGANIZATION 4.1 What is Financial Planning? Growth as a Financial Management Goal Dimensions of Financial Planning What Can Planning Accomplish? 4.1 Key Concepts and Skills 4.2 Chapter Outline 4.3 Elements of Financial Planning 4.4 Financial Planning Process 4.5 Role of Financial Planning 4.6 Financial Planning Model Ingredients 4.7 Example: Historical Financial Statements 4.8 Example: Pro Forma Income Statement 4.9 Example: Pro Forma Balance Sheet 4.10 Percent of Sales Approach 4.11 Example: Income Statement 4.12 Example: Balance Sheet 4.13 Example: External Financing Needed 4.14 Example: Operating at Less than Full Capacity 4.15 Work the Web Example 4.16 Growth and External Financing 4.17 The Internal Growth Rate 4.18 The Sustainable Growth Rate 4.19 Determinants of Growth 4.20 Important Questions 4.21 Quick Quiz
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A-48 CHAPTER 4 4.2 Financial Planning Models: A First Look A Financial Planning Model: The Ingredients A Simple Financial Planning Model 4.3 The Percentage of Sales Approach The Income Statement The Balance Sheet A Particular Scenario An Alternative Scenario 4.4 External Financing and Growth EFN and Growth Financial Policy and Growth A Note on Sustainable Growth Rate Calculations 4.5 Some Caveats Regarding Financial Planning Models 4.6 Summary and Conclusions ANNOTATED CHAPTER OUTLINE Slide 4.1 Key Concepts and Skills Slide 4.2 Chapter Outline Slide 4.3 Elements of Financial Planning 4.1. What is Financial Planning? .A Growth as a Financial Management Goal Growth is a by-product of increasing value; but it should not be a goal on its own. .B Dimensions of Financial Planning Slide 4.4 Financial Planning Process Planning horizon (usually 2 – 5 years) Aggregation (lumping accounts together) Lecture Tip, page 92: Students may grasp the notion of best- and worst-case scenarios only incompletely without realizing it. They often consider only one dimension and have a tendency to focus only on low sales or high costs. You may wish to emphasize that, in reality, it is often the confluence of several (sometimes related) factors in
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CHAPTER 4 A-49 combination that constitute a worst- or best-case scenario. One might describe a worst-case scenario as one in which sales drop 40% due to an economic downturn, which, in turn, causes a build- up in finished goods and is reflected in a slowing of payments from customers and a reduction in the firm’s ability to borrow on a short-term basis. Financial management involves the ability to deal with these situations simultaneously – only with financial planning of some type can you hope to estimate the multiple effects of these events on cash flows and make contingency plans. .C
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IM Chapter 4 Long term Financial Planning and Growth -...

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