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Financial Planning
Chapter 17
| Question | Answer |
|---|---|
| S corporation | a small corporation that elects to be to be taxed as a proprietorship or partnership yet keep corporation limited liability. |
| Tax Loss carryback and carryover | Operating losses that can be carried back and fourth in time to offset taxable income in a year. |
| Capital Gain(loss) | asset sold for less than it's depreciated value. |
| Financial Planning | The projection of sales, income,and assets as well of the resources needed to achieve them. |
| Financial Control | phase in which financial plans are implemented. |
| Sales Forecast | A forecast of a firm's unit and dollar sales for some future period. Base on trends |
| AFN (additional funds needed) | Funds a firm must raise externally by new borrowing or selling stock |
| Projected (pro forma) balance sheet method | A method of financing financial requirements based on forecasted financial statements. |
| Spontaneously generated funds | Funds that are obtained from routine business transactions. |
| Financing Feedbacks | The effects on the income statement and balance sheet of actions taken to finance forecasted increases in assets |
| Lumpy Assets | Assets that can only be obtained in large in large discrete amounts |
| Operating breakeven analysis | studies the relationship among sales, revenues, operating costs, and profits |
| operating breakeven point | level of production and sales which the net operating income is zero. revenues from sales equal total operating costs. |
| Operating Leverage | A firms fixed assets |
| Degree of operating Leverage | The percentage change of NOI(or EBIT) associated in the change in sales volume. |
| Financial breakeven analysis | determining the operating income (EBIT) the firm needs to cover all of its financing costs and produce earnings per share equal zero. |
| Financial breakeven point | The level of EBIT at which EPS equals zero |
| Financial leverage | how change in operating income affects earning s per share. |
| Degree of financial leverage (DFL) | The percentage change in EPS taht results from a given percentage change in EBIT |
| Degree of Total Leverage (DTL) | The percentage change in EPS that results from a 1 percent change in sales |
| taxable income | gross income minus exemptions and allowable deductions as set forth in tax code |
| progressive tax | a tax that requires a higher percentage payment on higher incomes |
| marginal tax | the tax applicable to the last unit of income (the tax payer;s tax bracket) |
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