Many of firm’s capital expenditure is proposed by

Company’s chief executive & specialists in areas such as , & are closely involved in process

Final financial plan will be subject to approval by

Planning horizon- horizon for

Different possible outcomes that are often asked to model are: , &

Financial plans help ensure that their financial are consistent with their . Also, they highlight financial necessary to support firm’s & goals

One main category for why financial plans are built is . This is to formulate to inevitable

Another main category for why financial plans are built is . need to think whether there are opportunities for company to its existing by moving to area (establishes firm in market & creates for possible value)

Third main category for why financial plans are built is . Financial plans draw out between firm’s plan for & requirement. Financial plans must ensure firm’s are mutually

One major component of financial planning model is . This includes financial & of key (such as sales or interest rates)

Another major component of financial planning model is . This includes specifying key i.e. show how change in sales is likely to affect , working , fixed & requirements

Third major component of financial planning model is . This includes financial (pro forma), ratios & & uses of

Percentage sales model- model in which forecasts are driving & most other are assumed to be to

Sales is force as it will define a lot of other i.e. level of fixed , costs, etc. However, assumption that other are assumed to be proportional to sales is

Balancing item- that adjusts to maintain of plan. It's also called

Plough-back ratio (b) =

Internal growth rate- growth rate that can be with no of any kind, i.e.

Sustainable growth rate- growth rate that can be with no while maintaining constant ratio

One determinant of growth is . Increase in will increase therefore, increase . Higher the amount of , higher level of you can have in order to keep ratio constant

Another determinant of growth is . Increase in this, increases generated by each unit in . This decreases need for new as grow hence, increases rate

Third determinant of growth is . Increase in ratio makes additional financing available, in turn increases rate

Fourth determinant of growth is . Decrease in increases hence, increases rate

One caveat of financial planning models is financial planning models ignore , & . Financial planning rely on relationships not relationships

Another caveat of financial planning models is financial planning should not be

Third caveat of financial planning models is financial planning should be . Plans should be , & over & over

One step involved in financial planning process is analysing & choices open to

Another step involved in financial planning process is projecting future of current

Another step involved in financial planning process is deciding which to

Another step involved in financial planning process is measuring subsequent against set forth in plan