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6 Cards in this Set
- Front
- Back
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Two methods in a sales forecast
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1. any past trend in sales
2. effects of any events |
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Percent of Sales Method
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projecting the financial variable as a percent of projected sales
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What is discretionary financing needs?
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is the amount of financing the firm needs to obtain from non spontaneous sources in order to finance its assets
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What are spontaneous sources of financing?
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accounts payable and other liabilities
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What are the two effects on revenue growth and DFN?
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1. Growth requires the firm to invest in additional working capital
2. Increase in revenues, increase in profits which therfore increases retained earnings |
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Why do firms engage in financial planning, and thus create financial forcasts?
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1. To plan the budget for the future
Cannot run out and borrow money today for tomorrows needs 2. To purchase material for production needs; to purchase products, services, or components |
