TAILIEUCHUNG - Lecture Fundamentals of corporate finance - Chapter 4: Long-term financial planning and corporate growth

Learning objectives of this chapter include: How to apply the percentage of sales method, how to compute the external financing needed to fund a firm’s growth, the determinants of a firm’s growth, some of the problems in planning for growth. | Chapter Outline Chapter 4 Long-Term Financial Planning and Corporate Growth Chapter Organization What is Financial Planning? Financial Planning Models: A First Look The Percentage of Sales Approach External Financing and Growth Some Caveats Regarding Financial Planning Models Summary and Conclusions CLICK MOUSE OR HIT SPACEBAR TO ADVANCE Irwin/McGraw-Hill copyright © 2002 McGraw-Hill Ryerson, Ltd. Financial Planning Model Ingredients Sales Forecast Drives the model Pro Forma Statements The output summarizing different projections Asset Requirements Investment needed to support sales growth Financial Requirements Debt and dividend policies The “Plug” Designated source(s) of external financing Economic Assumptions State of the economy, interest rates, inflation Example: A Simple Financial Planning Model Recent Financial Statements Income statement Balance sheet Sales $100 Assets $50 Debt $20 Costs 90 Equity 30 Net Income $ 10 Total $50 Total $50 Assume that: 1. sales are projected to rise by 25% 2. the debt/equity ratio stays at 2/3 3. costs and assets grow at the same rate as sales Example: A Simple Financial Planning Model (concluded) Pro Forma Financial Statements Income statement Balance sheet Sales $ Assets $ Debt Costs Equity Net $ Total $ Total $ Example: A Simple Financial Planning Model (concluded) Pro Forma Financial Statements Income statement Balance sheet Sales $ 125 Assets $ Debt $ 25 Costs Equity Net $ Total $ Total $ What’s the plug? Notice that projected net income is $, but equity only increases by $. The difference, $ paid out in cash dividends, is the plug. Income Statement (projected growth = 30%) Original Pro forma Sales $2000 $__ (+30%) Costs 1700 2210 (= 85% of sales) EBT 300 __ Taxes (34%) 102 Net income 198 Dividends 66 (= 1/3 of net) Add. to ret. Earnings _

• Tài chính doanh nghiệp
• Corporate finance
• Fundamentals of corporate finance
• Financial manager
• Business organization
• Financial management
• Long term financial planning
• Intermediate corporate finance
• Lecture Intermediate corporate finance
• Tài chính doanh nghiệp
• Corporate valuation
• Value based management
• International corporate finance
• Capital market history
• Raising capital
• Financial leverage
• Financial reporting
• Social welfare
• Forward contracts
• The stock markets
• Basic return concepts
• Portfolio theory
• Bond valuation
• Basic stock valuation
• Accounting for financial management
• Analysis of financial statements
• Financial planning
• Forecasting financial statements
• Capital budgeting
• Decision criteria
• Estimating cash flows
• Real options
• Capital structure decisions
• The levered firm
• Cash management
• Financial distress
• Hedging risk
• Warrants and convertibles
• Principles of corporate finance
• Understanding options
• Valuing options
• Financial analysis
• Financial institutions