This document summarizes key aspects of long-term corporate financial planning. It discusses what financial planning involves, including creating sales forecasts, pro forma financial statements, and addressing asset/liability requirements and financing needs. It also covers determining a company's sustainable growth rate and how various factors like profit margins, assets, debt, and equity issuance influence a company's ability to grow. The document cautions that financial planning models simplify reality and changing conditions may alter the best financial policies for a company.

1. CHAPTER 3 Long-Term Financial Planning and Growth

16. A Brief Example Current Balance Sheet Pro forma Balance Sheet (millions) Explanation Current assets $6 $6.6 30% of sales Fixed assets $24 $26.4 120% of sales Total assets $30 $33 150% of sales Short-term debt $10 $11 50% of sales Long-term debt $6 $6.6 30% of sales Common stock $4 $4 Constant Retained Earnings $10 $11.1 Net Income Total financing $30 $32.7 $300,000 Funds needed (millions)