Sale forecasting method to create pro forma financial statements
Corporate Finance (Student Post)
Corporate finance deals with the capital structure of a corporation including its funding and the actions management take to increase the value of the company. Corporate finance also includes the tools and analysis utilized to prioritize and distribute financial resources. The ultimate purpose of corporate finance is to maximize the value of a business through planning and implementing management resources while balancing risk and profitability. A company’s capital structure is crucial to maximizing the value of the business. Its structure can be a combination of long-term and short-term debt or common and preferred equity. The ratio between a firm’s liability and its equity is often the basis for determining how well balanced or risky capital financing is.
#5 Financial Manager ( Student Post)
The text explains that there are three main questions that a financial manager is concerned with and the first one is long term budgeting considered to be capital budgeting. Capital budgeting is the management process that is taken to manage a firm’s investments. In capital budgeting the financial manager look for opportunities to invest in something that is worth more than the firm pays for it. Capital structure is the equity and debt maintain by a firm. The firm operates off of the long term debt and equity that the company provides. The financial manger has to decide how much to borrow so it affects the risk and value of the firm in a positive way. The financial manager also have to worry about the least expensive sources of funds for the company will be. Working capital is the short term liabilities and assets for the firm. The working capital has to be handle day to day to make sure enough resources are available for the company to continue operate smoothly.
#6 Financial Manager ( Professor follow-up to Question 5)
Great post. To share some experience… in most corporations, when you hear someone refer to the capital plan or the capital budget, they are referring to a plan or budget related to capital spending such as a leasehold improvement, machinery and equipment or office furniture (to use 3 common examples). For our class and given the text, we are working with a broader definition to address capital as funds and financing. For example, I am currently with a start up company and our capital plan includes raising money from investors as well as funding capital expenditures as we develop our facility. Does this shed a little more light on the topic?
#7 Long-Term Financial Planning and Growth
Consider the following as you read:
What is the sale forecasting method to create pro forma financial statements?
#8 Working Capital (Student Post)
Working capital, also known as net working capital, is the difference between a company’s current assets, like cash, accounts receivable (customers’ unpaid bills) and inventories of raw materials and finished goods, and current liabilities, like accounts payable.
Working Capital = Current Assets – Current Liabilities
Most projects require an investment in working capital, which reduces cash flow, but cash will also fall if money is collected too slowly, or if sales volumes are decreasing – which will lead to a fall in accounts receivable. Companies that are using working capital inefficiently can boost cash flow by squeezing suppliers and customers.
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