Management and Organizational Studies 2310A/B Lecture Notes - Lecture 7: National Information Technology Agency, Capital Structure, Capital Budgeting

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Jun Wang

Document Summary

Chapter 4 - long-term financial planning and corporate. Investment in new assets determined by capital budgeting decisions. Degree of financial leverage determined by capital structure. Cash paid to shareholders dividend policy decisions. Liquidity requirements determined by net working capital decisions decisions. Planning horizon - short-run decisions (next 12 months) and long-run decisions (2 5 years) Aggregation - combine capital budgeting decisions into one big project. Assumptions and scenarios: make realistic assumptions about important variables, run several scenarios where you vary the assumptions by, determine at least a worst case, normal case and best reasonable amounts case scenario. Examining interactions helps management see the interactions. Exploring options gives management a systematic framework for exploring its opportunities. Avoiding surprises helps management identify possible outcomes and plan accordingly. Ensuring feasibility and internal consistency helps management determine if goals can be accomplished and if the various stated (and unstated) goals of the firm are consistent with one another.