Exam 11: Projecting Financial Requirements

D&R Products forecast its cash requirements for year one at 4% of sales, resulting in a $10,000 cash need. The cash will be reflected in the balance sheet as _____.

(Multiple Choice)

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Question 21

Financial forecasts are required by lenders who want to know how they will be paid back, but not by investors, because they are receiving equity for their investment.

(True/False)

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Question 22

Briefly explain liquidity and its relationship to the current ratio.

(Essay)

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Question 23

In a real world situation an entrepreneur should project the profits to two years into the future.

(True/False)

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Question 24

A firm's sales are the primary force driving future asset needs.

(True/False)

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Question 25

Explain the percentage-of-sales technique.

(Essay)

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Question 26

The conventional measure of liquidity is the current ratio, which compares the current assets to current liabilities on a relative basis.

(True/False)

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Question 27

For the typical small firm the primary source of equity capital for financing growth is

(Multiple Choice)

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Question 28

Many small firms have a tendency to overestimate the amount of capital the business requires.

(True/False)

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Question 29

The difference between the statement of cash flows and the pro forma statement of cash flows is that the latter deals with historical data and the former deals with projections into the future.

(True/False)

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Question 30

According to the text the first step in preparing a cash budget is

(Multiple Choice)

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Question 31

Accounts payable and accrued expenses rise as a firm's sales increase. This phenomenon is known as

(Multiple Choice)

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Question 32

After projecting sales the next step in forecasting a company's income is to project

(Multiple Choice)

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Question 33

List the factors that drive net profits in the order that they should appear on the income statement.

(Essay)

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Question 34

The income statement gives us all the information we need to know to determine the firm's cash flow.

(True/False)

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Question 35

As a general rule an entrepreneur should maintain a current ratio of _____ or have a good reason for not doing so.

(Multiple Choice)

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Question 36

A wholesale sunglass company should break down its annual cash budget into shorter time units because

(Multiple Choice)

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Question 37

The results of forecasting asset requirements for a startup business will only be as good as its

(Multiple Choice)

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Question 38

The debt ratio expresses the firm's debt as a percentage of equity.

(True/False)

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Question 39

No single planning document is more important in the life of a company than the

(Multiple Choice)

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Question 40

Showing 21 - 40 of 57

Exam 11: Projecting Financial Requirements

D&R Products forecast its cash requirements for year one at 4% of sales, resulting in a $10,000 cash need. The cash will be reflected in the balance sheet as _____.

Financial forecasts are required by lenders who want to know how they will be paid back, but not by investors, because they are receiving equity for their investment.

Briefly explain liquidity and its relationship to the current ratio.

In a real world situation an entrepreneur should project the profits to two years into the future.

A firm's sales are the primary force driving future asset needs.

Explain the percentage-of-sales technique.

The conventional measure of liquidity is the current ratio, which compares the current assets to current liabilities on a relative basis.

For the typical small firm the primary source of equity capital for financing growth is

Many small firms have a tendency to overestimate the amount of capital the business requires.

The difference between the statement of cash flows and the pro forma statement of cash flows is that the latter deals with historical data and the former deals with projections into the future.

According to the text the first step in preparing a cash budget is

Accounts payable and accrued expenses rise as a firm's sales increase. This phenomenon is known as

After projecting sales the next step in forecasting a company's income is to project

List the factors that drive net profits in the order that they should appear on the income statement.

The income statement gives us all the information we need to know to determine the firm's cash flow.

As a general rule an entrepreneur should maintain a current ratio of _____ or have a good reason for not doing so.

A wholesale sunglass company should break down its annual cash budget into shorter time units because

The results of forecasting asset requirements for a startup business will only be as good as its

The debt ratio expresses the firm's debt as a percentage of equity.

No single planning document is more important in the life of a company than the

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