BFN 110 Lecture Notes - Lecture 23: Retained Earnings, Unit, Capital Structure
6 Jan 2021
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Document Summary
Provides a projection of how much profit the firm anticipates making over the ensuing time period. *look at textbook example on excel, question # 30 page 132 of. Shows the anticipated cumulative changes in a firm"s asset holdings and liabilities and equity account over the next time period is constructed from the prior period"s balance sheet and pro forma income statement and the cash budget. A shortcut, less exact, easier method of determining the financing needs. Assumes that the balance sheet accounts will maintain a constant percentage relationship to sales. More sales will mean more assets which will require more financing. Can be summarized by using the requires new funding formula (rnf) Percent-of-sales method the formula to determine the need for new funds (required new funds, or rnf) is: Financial forecasting is used to anticipate events in advance, particularly a need to raise more money for the business.
