COMMERCE 3FA3 Chapter 3 & 4: 3FA3-CH3+CH4.docx

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 3FA3
• Professor: Trevor Chamberlain

Document Summary

Sources of cash: a firm"s activities that generate cash. Uses of cash: a firm"s activities in which cash is spent. Statement of cash flows: a firm"s financial statement that summarizes its sources and uses of cash over a specified period. Common-size statement: a standardized financial statement presenting all items in percentage terms. Balance sheets are shown as a percentage of assets and income statements as a percentage of sales. Common-base-year statement: a standardized financial statement presenting all items relative to a certain base year amount. Financial ratios: relationships determined from a firm"s financial information and used for comparison purposes. Chapter 4: long-term financial planning and corporate growth. Planning horizon: the long-range time period the financial planning process focuses on, usually the next 2-5 years. Aggregation: process by which smaller investment proposals of each of a firm"s operational units are added up and treated as one big project.