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About this document
- Pages
- 6 pages
- Price
- $6 one-time, yours to keep
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- Format
- Subject
- Accounting, Finance
- Module
- FIN571 · Week 3
This document is a problem set on Generally Accepted Accounting Principles, covering topics such as sustainable growth rate, external financing needed, and financial planning. It is for Week 3 of the FIN571 module.
What's inside
- Sustainable growth rate calculation
- External financing needed
- Financial planning and goals
- Percentage of sales method
- Pro forma statements
- Operating cycle and cash cycle
Who it is for: Students taking the FIN571 module, Week 3. (Postgraduate)
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Summary
Generally accepted accounting principles cover the rules and guidelines for financial reporting. A student sees how to apply them to solve problems in financial planning.
Sustainable growth
Growth rate is calculated. It is a measure of how fast a company can grow without external financing. A company's return on equity and payout ratio are needed.
External financing needed
The amount of external financing needed is calculated. The company's assets, costs, debt and equity are used. The projected sales are given.
Financial planning
Financial planning is explained. It ensures internal consistency among the firm’s various goals. External financing needed is calculated. The operating cycle is explained.
Credit policy
Credit policy is described. The operating cycle and cash cycle are calculated. The effect of offering a discount is considered.
Key terms
- External financing needed
- The funds a company needs from outside sources to support its growth.
- Sustainable growth rate
- The maximum rate at which a firm can grow without external financing.
- Pro forma statements
- Projected future financial statements.
- Operating cycle
- The time between when a company pays for its inventory and when it receives payment from its customers.
- Cash cycle
- The time between when a company pays for its inventory and when it receives payment from its customers, minus the time it takes to pay suppliers.
- Trade credit
- Credit granted to another firm, resulting in accounts receivable.
Questions this document helps with
- How is a company's sustainable growth rate calculated?
- What is needed to calculate the external financing?
- What are the three components of credit policy?
Summary written with AI from the document's text.
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