FNBU 3221 Chapter 4: Chapter 4
Document Summary
Long-range planning is a means of systematically thinking about the future & anticipating possible problems before they arrive. Financial planning establishes guidelines for change & growth in firm & is concerned w/ major elements of firm"s financial & investment policies w/out examining individual components of those policies in detail. Growth as a financial management goal: growth not appropriate goal for financial manager by itself (growth desirable consequence of good decision making, not end unto itself) Dimensions of financial planning: planning horizon: long-range time period on which financial planning process focuses (usually next 2-5 years) 1st dimension of planning process that must be established: aggregation: process by which smaller investment proposals of each of firm"s operational units are added up & treated as 1 big project. Level of aggregation is 2nd dimension of planning process that needs to be determined: financial plan requires inputs in form of alternative sets of assumptions about important variables.
