Question 1

All of the following statements are true regarding ratios and forecasts except:

Accepted Answer

A)  Ratios cannot confirm whether forecast assumptions will turn out to be correct. 
B)  Ratios can tell whether future sales growth was accurately captured. 
C)  Ratios cannot tell whether assumptions about future cash flows are realistic. 
D)  Ratios can tell whether growth rates for sales are consistent with past sales growth performance. 
A)  Ratios cannot confirm whether forecast assumptions will turn out to be correct. 
B)  Ratios can tell whether future sales growth was accurately captured. 
C)  Ratios cannot tell whether assumptions about future cash flows are realistic. 
D)  Ratios can tell whether growth rates for sales are consistent with past sales growth performance.

Question 2

Which of the following statements does not apply to preventing "garbage in, garbage out" when implementing a forecasting game plan?

Accepted Answer

A)  The quality of the financial statement forecasts will depend on the quality of the forecast assumptions. 
B)  The quantities forecasted within financial statement forecasts will depend on the quantity of the forecast assumptions. 
C)  Analysts should justify and evaluate the most important assumptions that reflect the critical risk and success factors of the firm's strategy. 
D)  Analysts can impose reality checks on the assumptions by analyzing the forecasted financial statements using ratios, common-size, and rate-of-change financial statements. 
A)  The quality of the financial statement forecasts will depend on the quality of the forecast assumptions. 
B)  The quantities forecasted within financial statement forecasts will depend on the quantity of the forecast assumptions. 
C)  Analysts should justify and evaluate the most important assumptions that reflect the critical risk and success factors of the firm's strategy. 
D)  Analysts can impose reality checks on the assumptions by analyzing the forecasted financial statements using ratios, common-size, and rate-of-change financial statements.

All of the following statements are true regarding ratios and forecasts except:

Which of the following statements does not apply to preventing "garbage in, garbage out" when implementing a forecasting game plan?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters

Exam 10: Forecasting Financial Statements

All of the following statements are true regarding ratios and forecasts except:

Which of the following statements does not apply to preventing "garbage in, garbage out" when implementing a forecasting game plan?

Overview of Financial Reporting, Financial Statement Analysis, and Valuation

Asset and Liability Valuation and Income Measurement

Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Profitability Analysis

Risk Analysis

Financing Activities

Investing Activities

Operating Activities

Accounting Quality

Risk-Adjusted Expected Rates of Return and the Dividends Valuation Approach

Valuation: Cash-Flow-Based Approaches

Valuation: Earnings-Based Approaches

Valuation: Market-Based Approaches

Filters