Essentials of Corporate Finance


Choosing the Best Policy continued



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Ross FCF 10Ce Ch18
Ross FCF 10Ce Ch18

Choosing the Best Policy continued

  • Relative Interest Rates
  • Have to consider all these factors and determine a compromise policy that fits the needs of your firm
  • 18-

Figure 18.6 – A Compromise Financing Policy

  • 18-

The Cash Budget

  • Forecast of cash inflows and outflows over the next short-term planning period
  • Primary tool in short-term financial planning
  • Helps determine when the firm should experience cash surpluses and when it will need to borrow to cover working-capital costs
  • Allows a company to plan ahead and begin the search for financing before the money is actually needed
  • 18-

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