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Unformatted text preview: Lecture 9 In this chapter, we will see how a financial manager can use some of the information obtained through financial statement analysis for financial planning and control of the firms future operations. Financial planning is a process of anticipating future needs and establishing courses of action today to meet the financial objectives in the future. The financial planning usually begins with a sales forecast for the next few years. The sales forecast is usually based on recent trends (during the past five to ten years) plus economic or company specific factors. Once the sales forecast is determined, the managers usually construct pro forma financial statements with the following objectives: 1. to assess whether the firms expected performance is in line with the firms own general targets and with investors expectations, what-if analysis 2. to determine how much money the firm will need during a given period 3. to determine how much money the firm will generate internally during the same period 4. to subtract the funds generated from the funds required to determine the external financial requirements. Pro forma financial statements financial statements projecting future years operations. financial statements projecting future years operations....
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This note was uploaded on 09/06/2010 for the course ACCT 3220 taught by Professor Las during the Spring '10 term at Fordham.
- Spring '10