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8 Cards in this Set

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