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8 Cards in this Set
- Front
- Back
Planning horizon
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The long-range time period on which the financial planning process focuses (usually the next two to five years).
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Aggregation
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The process by which smaller investment proposals of each of a firm's operational units are added up and treated as one big project.
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Percentage of sales approach
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A financial planning method in which accounts are varied depending on a firm's predicted sales level.
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Dividend payout ratio
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The amount of cash paid out to shareholders divided by net income.
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Retention radio
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The addition to retained earnings divided by net income. Also called the plowback ratio.
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Capital intensity radio
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A firm's total assets divided by its sales, or the amount of assets needed to generate $1 in sales.
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Internal growth rate
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The maximum growth rate a firm can achieve without external financing of any kind.
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Sustainable growth rate
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The maximum growth rates a firms can achieve without external equity financing while maintaining a constant debt-equity radio.
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