 |  Fundamentals of Corporate Finance, 4/e Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
Long-Term Financial Planning and Corporate Growth
Key TermsBelow are the key terms featured in this chapter. Clicking on a term will reveal its definition. The textbook's full glossary is also available for online searching.
| Aggregation | Process by which smaller investment proposals of each of a firm's operational units are added up and treated as one big project.
(See Refer to page 97)
| | | | | Capital Intensity Ratio | A firm's total assets divided by its sales, or the amount of assets needed to generate $1 in sales.
(See Refer to page 104)
| | | | | Debt Capacity | The ability to borrow to increase firm value.
(See Refer to page 112)
| | | | | Dividend Payout Ratio | Amount of cash paid out to shareholders divided by net income.
(See Refer to page 103)
| | | | | Internal Growth Rate | The growth rate a firm can maintain with only internal financing.
(See Refer to page 110)
| | | | | Percentage of Sales Approach | Financial planning method in which accounts are projected depending on a firm's predicted sales level.
(See Refer to page 103)
| | | | | Planning Horizon | The long-range time period the financial planning process focuses on, usually the next two to five years.
(See Refer to page 97)
| | | | | Retention Ratio | Retained earnings divided by net income. Also called the plowback ratio.
(See Refer to page 104, 460)
| | | | | Sustainable Growth Rate | The growth rate a firm can maintain given its debt capacity, ROE, and retention ratio.
(See Refer to page 112)
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2002 McGraw-Hill Higher Education