Exam 17: Financial Forecasting and Planning

Assume that Zybo,Inc.has sales of $10 million and inventory of $2 million.The corporation utilizes the percent-of-sales method of financial forecasting.If Zybo is expected to generate sales of $14 million next year,what will the firm's investment in inventory be?

Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014;sales were $3,450,000 in fiscal 2013.Assume the following figures for the fiscal year ending 2013: cash $70,000;accounts receivable $250,000;inventory $400,000;net fixed assets $520,000;accounts payable $235,000;and accruals $155,000.Use the percent-of-sales method to forecast accruals for the fiscal year ending 2014.

Which of the following require adjustments when forecasting asset needs as a percent of sales?

Assume all else remains the same.Which of the following statements is true?

Which of the following is always a non-cash expense?

Which of the following accounts would normally increase with an increase in sales and approximately in proportion to the sales increase?

The percent-of-sales method can be used to forecast

What is meant by discretionary financing?

One purpose of long-term financial plans is to estimate the firm's future capital spending and financing needs.

Swings in discretionary financing needed can be caused by

Based on the information contained in Table 2,what are Fielding's projected total receipts (collections)for April?

Holding all other variables constant,as the dividend payout ratio decreases,the sustainable growth rate increases.

The cash budget for Parker Process Meats,Inc.for the fourth quarter of 2014 is given below: Parker Process Meats,Inc. Cash Budget for the Three Months Ending December 31,2014 Cash receipts Oct.Nov.Dec. Total collections $31,050 $4,050 $49,950 Cash disbursements: Purchases 44,550 48,600 52,650 Wages and salaries 7,425 7,425 7,425 Other expenses 2,025 1,350 675 Taxes 17,415 Total disbursements $54,000 $57,375 $78,165 The expected sales for the period are as follows: Oct.: $86,400 Nov.: $91,800 Dec.: $83,700 The total depreciation expense for the period will be $8,775. An interest payment on outstanding debt of $15,000 will be made in December. Using the information given,construct a pro forma income statement for the final quarter of 2014 for Parker.

Use the following information and the percent-of-sales method to answer the following question(s). Below is the 2014 year-end balance sheet for Banner,Inc.Sales for 2014 were $1,600,000 and are expected to be $2,000,000 during 2015.In addition,we know that Banner plans to pay $90,000 in 2015 dividends and expects projected net income of 4% of sales.(For consistency with the Answer selections provided,round your forecast percentages to two decimals. ) Banner,Inc.Balance Sheet December 31,2014 Assets Current assets $890,000 Net fixed assets 1,000,000 Total $1,890,000 Liabilities and Owners' Equity Accounts payable $160,000 Accrued expenses 100,000 Notes payable 700,000 Long-term debt 300,000 Total liabilities 1,260,000 Common stock (plus paid-in capital)360,000 Retained earnings 270,000 Common equity 630,000 Total 1,890,000 -Banner's projected retained earnings for 2015 are

Which of the following is the correct method of determining discretionary financing needed (DFN)?

The primary purpose of a cash budget is to

The percent-of-sales method of forecasting makes which of the following assumptions?

Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2014;sales were $3,450,000 in fiscal 2013.Assume the following figures for the fiscal year ending 2013: cash $70,000;accounts receivable $250,000;inventory $400,000;net fixed assets $520,000;accounts payable $235,000;and accruals $155,000.Use the percent-of-sales method to forecast accounts payable for the fiscal year ending 2014.

Pro forma statements provide single point estimates of each budgeted item.

Short-term financial plans span a period of