Exam 6: Projecting Financial Requirements and Managing Growth

Gaston Grooming Inc.,has a sustainable growth rate of 17.28%.If the retention ratio is .60,the leverage ratio is 1.2 and the asset turnover ratio is 1.6,what was the firm's profit margin?

Your firm's sales are estimated to increase by 10% in the next year.However,soon after the beginning of the year it becomes apparent that the growth in sales is more likely to be 20%.If your cost of good sold consists of both fixed and variable expenses,which of the following situations would you expect to be true?

Dunweiler Inc.,is developing a pro forma income statement for the coming year.The chief financial officer estimates that sales will be $150,000,000.If selling,general,and administrative expenses (SGA)are historically 18% of sales,what are the expected SGA expenses (in dollars)?

The process of determining the effects of one key variable on the overall outcome of a pro forma income statement,for example,is known as:

A pro forma balance sheet typically begins with liabilities and then we estimate the assets.

As an initial assumption,it is reasonable to assume that firms are reluctant to do all of the following EXCEPT:

When developing a pro forma balance sheet which of the following is typically the LAST item to be estimated?

When constructing pro forma balance sheets,________ becomes the "plug" figure to make the balance sheet balance.

Gremlin Media Inc.has realized tremendous growth in recent years.Last year the firm realized an ROE of 41.16%.If the firm was in a 40% marginal tax bracket,had an asset turnover ratio of 2.1,a profit margin of 14%,and a leverage ratio of 2,what was the firm's retention ratio?

Craftsman Inc.,has a profit margin of 8%,an asset turnover ratio of 2.3,a leverage ratio of 1.50 and a retention ratio of .60.What is the firm's sustainable growth rate?

Firms paying excess dividends may cause shareholders to pay taxes sooner and at a higher marginal tax rate than if the firm either held the excess funds,or found additional satisfactory investments.

A pro forma balance sheet typically begins with the assets and then we estimate the liabilites and equity.

In chapter 6,Projecting Financial Requirements and Managing Growth,the author focuses on three critical questions to examine the firm's financial future.Which of the following questions is NOT addressed by the author in this chapter?

Cantanna Inc.,is developing a pro forma income statement for the coming year.The chief financial officer estimates that fixed assets are $70,000,000 and that sales will be $300,000,000.If depreciation is historically 20% of fixed assets,what is the expected amount of depreciation for the upcoming year (in dollars)?

Which of the following would NOT be a direct concern of working capital sensitivity?

Pro forma estimates of cash flows are rarely if ever correct.

Dynamo Engines Inc.,has an ROA of 10%,a profit margin of 6%,an assets to equity ratio of 1.30 and a retention ratio of 0.70.What is the firm's sustainable growth rate?

A pro forma ________ forecasts the timing and amount of cash inflows and cash outflows.

In constructing a pro forma balance sheet a manager can estimate the accounts receivable because:

Which of the following is NOT a potential source of outside financing for a corporation?