CHAPTER 4 FINANCIAL PLANNING FOCUS We begin by explaining the nature of business planning and placing financial forecasting within that broader context. Once we get into financial planning we focus on exactly how to construct plans from physical assumptions about a business and its environment. Finally we look at some of the problems created when plans function as both goal statements and projections of what is most likely to happen in the future. PEDAGOGY This chapter
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Dividend policy is concerned with financial policies regarding paying cash dividend in the present or paying an increased dividend at a later stage. Whether to issue dividends‚ and what amount‚ is determined mainly on the basis of the company’s unappropriated profit (excess cash) and influenced by the company’s long-term earning power. When cash surplus exists and is not needed by the firm‚ then management is expected to pay out some or all of those surplus earnings in the form of cash dividends
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Objective of the study Due to high volatility in the stock markets it is considered as a very rigorous job to predict the future move to stock price. Secondary market participants often use two forecasting techniques‚ Fundamental & Technical analysis. The basic objective of conducting this report is to apply our theoretical knowledge in practical situation. The objective behind conducting this study is as follows: • Quantatives analyze of ten companies. • Qualitative analyze Fundamental
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5. If common stockholders are the owners of the company‚ why do they have the last claim on assets and a residual claim on income? Common stock ownership carries three primary rights of privileges. There is a residual claim to income‚ they alone have the privilege of voting‚ and they enjoy a first option to purchase new shares. The common stockholder is the last in line to receive payment but the stockholder’s potential participation is unlimited. Instead of getting a $1 dividend‚ the investor
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Price of Rs 28.10/share‚ offers an upside of +34% -BUY! Our bullish view is mainly on back of implied ICH implementation by the players as a result company’s EPS to show massive upside in CY13 by +265% YoY resulting in better cash flows and dividend payout‚ 2) Broadband segment expansion still going on‚ 3) Property issue expected to resolve and 5) finally UFONE to add value in longer run post 3G license announcement. We expect 1) topline average growth of 9% (2013-2015)‚ 2) gross margins to average
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MIDTERM #1 Student: ___________________________________________________________________________ 1. You purchase one September 50 put contract for a put premium of $2. What is the maximum profit that you could gain from this strategy? A. $4‚800 B. $200 C. $5‚000 D. $5‚200 E. None of these is correct The following price quotations on IBM were taken from the Wall Street 2. Journal. The premium on one IBM February 90 call contract is A. $4.1250 B. $418.00 C. $412.50 D. $158.00 E. None of
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The economic profit target for the division for 2001. c. The division manager’s bonus payout (% of salary) for 2000 and 2001. (Assume that the slope of the payoff line for 2000 was arbitrarily set by Berskshire management to equal 1.0). 3. Assume the base salary of the manager of the Snack Foods Division was ₤120‚000 in both 2000 and 2001. How much cash would the manager receive from his bonus payouts in 2000 and 2001? 4. Evaluate the Berkshire Industries’ new incentive plan. What changes
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Study Guide for Final Exam 1. (TCO B) Which of the following statements concerning the MM extension with growth is NOT CORRECT? (a) The tax shields should be discounted at the unlevered cost of equity. (b) The value of a growing tax shield is greater than the value of a constant tax shield. (c) For a given D/S‚ the levered cost of equity is greater than the levered cost of equity under MM’s original (with tax) assumptions. (d) For a given D/S‚ the WACC is greater than the WACC under MM’s
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Quiz 1- Spring 2013 Group 1 1. Which of the following concerning the relationship between risk and return is correct? A. Investors do not need to be compensated for taking on risk. B. Investors generally demand higher return for lower risk investments. C. Safer investments tend to have lower returns. D. Higher risk investments provide lower returns. E. Risk and return are not related. 2. Which of the following concerning the relationship between risk and return is correct? A. Risk
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Pakistan‚ and stocks are expected to remain dull. KSE has set an all time high of 12‚400 points‚ before settling around the 11‚000 mark. Result season in June and better payout expectations can drive the market to record level high again. Karachi stock exchange Board of Directors has recently (2007) announced plans to construct a 40 story highrise KSE building ‚ as a new direction for future investment. In My Observation Pakistan being among the developing economies of the world has the benefit
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