BU283 Chapter Notes - Chapter 14: Retained Earnings, Capital Expenditure, Income Statement
Document Summary
Strategic planning: process of determining the company"s goals, the direction the company will take, and how to allocate resources to achieve these goals. Long-term financial plans allow manager to prepare short-term financial plans, called cash budgets plans help managers direct company"s future, rather than just react to it. Discounted cash flow (dcf) valuation: analogous to a project npv calculation; the company"s free cash flows are discounted at the weighted average cost of capital; present value is the value of the whole company (debt + equity) Sales forecast: prediction of firm"s sales over a given period, based on external/internal data, and used as the key input to the financial planning process. Cash budgeting: short-term financial planning; process of forecasting cash receipts and disbursements to identify cash imbalances. Long-term financial planning: process of forecasting financial statements to identify shortages (or excesses) of capital.
