C1-4 Revised Flashcards
What is the financial planning process?
It guides, coordinates and controls the firm’s actions to achieve its objectives.
List the 2 key aspects of financial planning.
Cash planning
Profit Planning
What is cash planning?
Preparing the firm’s cash budget & ST financial plan.
What is profit planning?
Preparing the firm’s pro forma financial statements & ST financial plan.
List the financial activities in long-term financial planning. MPRS
Marketing
Product Development
Research
Sources of financing
What are the key inputs of short financial plans? SFP
Sales forecast
Financial data
Production plans
What is the firm’s statement of cash flow?
Firm’s cash flow over a given period of time to reconcile the cash and cash equivalents of the firm.
List the 3 sections/activities of the statement of cash flows. OIF
Operation flows - income & expenses
Investment flows - non-current assets
Financing flows - equity & borrowings
What are the main activities of operating cashflow?
Cash receipts from customers
Cash paid to suppliers.
What does operating cashflow focus on/ what is operating cashflow used in?
Managerial decision-making
Which cash flows do firm’s use in managerial decision-making?
Managerial decision-making
How to calculate free cash flow?
FCF = OCF - NFAI - NCAI
Explain the cash planning process. CSEM
Cash Budget: Tracks cash inflows & outflows for a period.
Sales Forecast: Predicts future sales and resulting cash flow.
Estimate Cash Needs: Identify cash surpluses or shortfalls.
Manage Cash Flow: Helps invest surpluses.
List the inputs required to develop pro forma statements. FSK
Financial statements from preceding years
Sales forecasts for the coming year
Key assumptions about factors
Explain the process of pro forma financial statements.
Sales forecast
