Management and Organizational Studies 2310A/B Study Guide - Midterm Guide: Financial Plan, A Best, Sinking Fund
28 Sep 2018
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Document Summary
A lack of effective long range planning is a commonly cited reason for financial distress and failure. Financial planning establishes guidelines for change and growth in a firm. Formulates the way financial goals are to be achieved. What is to be done in the future. The appropriate goal is increasing the market value of owners" equity. Growth rates are commonly used in the planning process. Planning horizon the long-range time period the financial planning process focuses on, usually the next two to five years. Aggregation the process by which smaller investment proposals of each of a firm"s operational units are added up and treated as one big project. Each division needs to prepare three alternative business plans for the next three years: a worst case: Pessimistic assumptions about the company"s products and state of the economy. Require details concerning cost cutting, liquidation and such: a normal case:
