Exam 4: Cash Flow and Financial Planning

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. Prepare a cash budget for the months of February through May to answer the following multiple choice questions. -If a pro forma balance sheet dated at the end of May was prepared from the information presented, the accounts receivable would total ________. (See Table 4.3)

Table 4.1 Ruff Sandpaper Co. Balance Sheets For the Years Ended 2009 and 2010 -The firm ________ fixed assets worth ________. (See Table 4.1)

Table 4.1 Ruff Sandpaper Co. Balance Sheets For the Years Ended 2009 and 2010 -For the year ended December 31, 2008, a corporation had cash flow from operating activities of -$10,000, cash flow from investment activities of $4,000, and cash flow from financing activities of $9,000. The Statement of Cash Flows would show a

Allocation of the historic costs of fixed assets against the annual revenue they generate is called

Of the following components of a cash budget, generally the easiest to estimate would be

Table 4.1 Ruff Sandpaper Co. Balance Sheets For the Years Ended 2009 and 2010 -The depreciation expense for 2010 is ________. (See Table 4.1)

Under MACRS, an asset which originally cost $100,000 is being depreciated using a 10-year normal recovery period. The depreciation expense in year 5 is

Cash budget is a statement of the firm's planned inflows and outflows of cash that is used to estimate its long-term cash requirement.

If transportation costs were a huge portion of a firm's expenses and the firm expected gas prices to increase greatly in the next year, then in preparing its proforma income statement the firm should

A projected excess cash balance for the month may be

In October, a firm had an ending cash balance of $35,000. In November, the firm had a net cash flow of $40,000. The minimum cash balance required by the firm is $25,000. At the end of November, the firm had

The ________ method of developing a pro forma balance sheet estimates values of certain balance sheet accounts while others are calculated. In this method, the firm's external financing is used as a balancing, or plug, figure.

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. Prepare a cash budget for the months of February through May to answer the following multiple choice questions. -The total cash receipts for April are ________. (See Table 4.3)

Table 4.1 Ruff Sandpaper Co. Balance Sheets For the Years Ended 2009 and 2010 -The largest single source of funds for the firm in 2010 is ________. (See Table 4.1)

Table 4.2 Magna Fax, Inc. Balance Sheet For the Years Ended December 31, 2009 and 2010 -The credit manager at First National Bank has just received the income statement and balance sheet for Magna Fax, Inc. for the year ended December 31,2010. (See Table 4.2.) The bank requires the firm to report its earnings performance and financial position quarterly as a condition of a loan agreement. The bank's credit manager must prepare two key financial statements based on the information sent by Magna Fax, Inc. This will be passed on to the commercial loan officer assigned to this account, so that he may review the financial condition of the firm. (a) Prepare a statement of retained earnings for the year ended December 31, 2010. (b) Prepare a summary of cash inflows and cash outflows for the year ended December 31, 2010. (c) Prepare a statement of cash flows for the year ended December 31, 2010, organized by cash flow from operating activities, cash flow from investment activities, and cash flow from financing activities.

Depreciation is considered to be an outflow of cash since the cash must be drawn from somewhere.

During 2010, NICO Corporation had EBIT of $100,000, a change in net fixed assets of $400,000, an increase in net current assets of $100,000, an increase in spontaneous current liabilities of $400,000, a depreciation expense of $50,000, and a tax rate of 30%. Based on this information, NICO's free cash flow is

A firm has prepared the coming year's pro forma balance sheet resulting in a plug figure in a preliminary statement called the external financing required of $230,000. The firm should prepare to

Table 4.1 Ruff Sandpaper Co. Balance Sheets For the Years Ended 2009 and 2010 -All of the following are operating cash flows EXCEPT

Table 4.1 Ruff Sandpaper Co. Balance Sheets For the Years Ended 2009 and 2010 -For the year ended December 31, 2008, a corporation had cash flow from operating activities of $12,000, cash flow from investment activities of - $10,000, and cash flow from financing activities of $4,000. The Statement of Cash Flows would show a