4FINANICIAL_ANALYSIS_PLANNING_CHAPTER_3_

4FINANICIAL_ANALYSIS_PLANNING_CHAPTER_3_ - CHAPTER 3...

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CHAPTER 3 FINANCE 300 FINANCIAL PLANNING SPRING 2010 FINANCIAL PLANNING 1.Cash Planning (Cash Budget) 2. Profit or Performance Planning (Pro Forma Income Statement), Financial Mix Planning (Pro Forma Balance Sheet) Strategic (Long-term) Years out, integrated strategy done by senior executives Operating (Short-term) The Sales Forecast-____________________________________________________________ Reasons for Holding Cash (Baumol) 1. Transaction Motive 2. Precautionary Motive 3. Speculative Motive 4. Compensating Balance THE CASH BUDGET- Matched expected cash inflows to expected outflows and shows expected cash position or cash balance REASONS TO PREPARE CASH BUDGET 1. Use as Budget- compare expected to actual and investigate variances 2. Predicts Cash Shortages and Surpluses and allows for planning 3. Loan Documentation (How much, when, reason, when repayment) Cash Inflows: Cash Sales, Collect Accounts Receivable, Interest Income, Dividend Income, Sell Assets, Issue Securities Cash Outflows: Cash Purchases, Pay Account Payable, Principle Payments, Interest Expense, Taxes,
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This note was uploaded on 05/19/2010 for the course FNAN 300 taught by Professor Boudreaux during the Spring '10 term at University of Louisiana at Lafayette.

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4FINANICIAL_ANALYSIS_PLANNING_CHAPTER_3_ - CHAPTER 3...

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