FIN 300 Chapter Notes - Chapter 4: Profit Margin, Dividend Payout Ratio, Current Liability
Document Summary
Fin 300 chapter 4: long-term financial planning & corporate growth. Long-range planning is a means of systematically thinking about the future and anticipating possible problems before they arrive. To develop an explicit financial plan, management must establish certain elements of the firm"s financial policy: the firm"s needed investment in new assets. Investment opportunities that are undertaken and the result of the firm"s capital budgeting decisions: degree of financial leverage the firm chooses to employ. Determines the amount of borrowing the firm uses to finance its investments in real assets. Firm"s capital structure policy: amount of cash the firm thinks is necessary and appropriate the pay shareholders. Firm"s dividend policy: amount of liquidity and working capital the firm needs on an ongoing basis. Firm"s investment and financing policies interact and thus cannot truly be considered in isolation from one another. Financial planning formulates the way financial goals are to be achieved: statement of what is to be done in the future.
