In what five ways do managers use pro forma financial statements?
Briefly describe each of these corporate planning terms: (1) mission
statement, (2) corporate scope, (3) corporate objectives, and (4) cor-
porate strategies.
How can the financial plan be used to help formulate corporate
strategies
Why is an accurate sales forecast critical for financing planning?
If the key ratios are expected to remain constant, the AFN equation
can be used to forecast the need for external funds. Write out the
equation and explain its logic.
How do the following factors affect the AFN, or the requirements
for external capital?
(1) Retention ratio.
(2) Capital intensity.
(3) Profit margin.
(4) Dividend payout ratio.
(5) Sales growth.
Is it possible for the AFN to be negative? What would that indicate?
If excess capacity exists, how will that affect the AFN?
