D076 Module 9 FLASHCARDS

Company ABC would like to continue to grow, but in order to maintain control of all decisions and ownership, it wants to avoid issuing new stock. Which calculation will show the company's leadership the fastest that ABC can grow? - Sustainable growth rate How can a company reduce its discretionary financing needed (DFN)? - Increase the net margin. How can a firm grow its fixed assets if it is expecting growth but has reached capacity with its fixed assets? - Invest a substantial amount of money at one time to increase capacity. How does financial forecasting help with financial decision-making? - It helps decision makers understand the impacts of today's actions on the future performance of the firm. If a company expects sales to grow by 10% next year, which account might also increase by 10%? - Cost of goods sold What are spontaneous accounts? - Accounts that vary naturally with sales What does the discretionary financing needed (DFN) tell us? - The total amount of funding that management will need to obtain through discretionary financing sources What does the sales capacity equation tell you? - How much room a firm has to grow without additional investment in fixed assets What is discretionary financing needed (DFN)? - The additional financing needed given a firm's expected future growth