Professional Documents
Culture Documents
Financial Planning
Slides by
Matthew Will
McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
Topics Covered
10-2
Cumulative
capital requirement
Balance Sheet
10-4
Dividend 30
Earnings retained in the business 30
Dynamic Depreciation
Decrease (increase) in accounts receivable
20
-25
Mattress Decrease (increase) in inventories 5
Increase (decrease) in accounts payable 25
Company Net cash flow from operating activities 85
Cash
Finished goods
Cash Budgeting
10-12
Cash Budgeting
10-14
Dynamic Other
Total sources 511
0 0
519.4
77
747 807.8
0
Repayments:
continued 4. Bank loan 0 0 7.6 92.4
5. Stretching payables 0 16 92.4 0
6. Total 0 16 100 92.4
Mattress
Note: Cumulative borrowing and security sales
Company- Bank loan 100 100 92.4 0
Financing Plan Stretching payables 16 92.4 0 0
Net securities sold 25 25 12.6 -62.7
Interest payments
11. Bank loan 0 2.5 2.5 2.3
12. Stretching payables 0 0.8 4.6 0
13. Interest on securities sold 0 0.5 0.5 0.3
14. Net interest paid 0 3.8 7.6 2.6
15. Cash required for operations 141 72.6 -120 -170.3
Financial Planning
10-18
10-22
Uses of capital:
2. Increase in net w orking capital (NWC)
assuming NWC = 11% of revenues 50 100.4 58.1 69.7 83.6 100.4
3. Investment in fixed assets (FA)
assuming net FA = 12.5% of revenues 30 102.5 95.7 114.8 137.8 165.4
4. Dividend (60% of net income) 30 53.9 60.1 71 84.1 99.7
5. Total uses of funds (2+3+4) 110 256.8 213.9 255.5 305.5 365.4
10-24
Planners Beware
10-26
retained earnings
Internal growth rate =
net assets
retained earnings net income equity
= x x
net income equity net assets
Web Resources
10-28
www.directpayment.org
www.nacha.org
www.phoenixhecht.com
www.gecfosolutions.com
www.federalreserve.gov