Exam 4: Cash Flow and Financial Planning

In a period of rising sales, utilizing past cost and expense ratios (percent-of-sales method) when preparing pro forma financial statements will tend to ________.

The net current asset investment (NCAI) is defined as the change in current assets minus the change in sum of the accounts payable and accruals.

The primary purpose in preparing pro forma financial statements is ________.

Strategic financial plans are planned long-term financial actions and the anticipated financial impact of those actions.

The percent-of-sales method of developing a pro forma income statement forecasts sales and other line items as a ________.

Operating financial plans are planned short-term financial actions and the anticipated financial impact of those actions.

Which of the following is an example of noncash charges?

Table 4.1 True Sandpaper Co. Balance Sheets For the Years Ended 2014 and 2015 -The largest single source of funds for the firm in 2015 is ________. (See Table 4.1)

Income Statement Huddleston Manufacturing Company For the Year Ended December 31, 2015 Huddleston Manufacturing estimates its sales in 2016 will be $3 million. Interest expense is expected to remain unchanged at $70,000, and the firm plans to pay cash dividends of $140,000 during 2016. Use the percent-of-sales method to prepare a pro forma income statement for the year ended December 31, 2016, based on the 2015 income statement shown above.

Utilizing past cost and expense ratios (percent-of-sales method) when preparing pro forma financial statements will tend to ________.

Pro forma financial statements are used for ________.

The weakness of the judgmental approach to preparing a pro forma balance sheet is ________.

In general, firms that are subject to a high degree of ________, relatively short production cycles, or both, tend to use shorter planning horizons.

Cash budgets and pro forma statements are useful not only for internal financial planning but also are routinely required by the Internal Revenue Service (IRS).

________ generally reflect(s) the anticipated financial impact of planned long-term actions.

Which of the following represents a cash flow from operating activities?

Table 4.3 The financial analyst for Sportif, Inc. has compiled sales and disbursement estimates for the coming months of January through May. Historically, 75 percent of sales are for cash with the remaining 25 percent collected in the following month. The ending cash balance in January is $3,000. -If a pro forma balance sheet dated at the end of May was prepared from the information presented, the marketable securities would total ________. (See Table 4.3)

The net fixed asset investment (NFAI) is defined as the change in net fixed assets plus depreciation.

A financial planning process begins with short-term, or operating, plans and budgets that in turn guide the formulation of long-term, or strategic, financial plans.

The excess cash balance is the amount available for investment by a firm if the desired minimum cash balance is less than the period's ending cash.