Exam 17: Financial Forecasting and Planning

Based on the information in Table 1, what are Dorian Industries' total cash receipts (collections) for April 2017?

Why is financial planning important in a highly uncertain financial environment.

The percent-of-sales method is more detailed than the cash budget method.

As of December 31, Budget, Inc. had a cash balance of $50,000. December sales were $150,000 and are expected to be $100,000 in January. 20% of sales in any month are cash sales, and 80% of sales are collected during the following month. In January, Budget is expected to have total cash disbursements of $120,000, and Budget requires a minimum cash balance of $50,000. Budget's expected cash receipts for January are

Types of plans that businesses typically use to guide their operations include

The cash budget only includes items that also appear on the income statement, although the timing may be different.

The timing of collections from sales made in past months is an important consideration for cash budgeting.

An exceptionally high growth rate in sales will typically

Short-term financial plans span a period of

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

South County Fiberoptics projects that it will need $100 million in total assets to meet the sales projection of $130 million. The pro forma balance sheet shows accounts payable, $16 million, accrued expenses, $4 million, long-term debt, $20 million and equity, $65 million. If South County decides to meet discretionary financing needs with 5 year notes payable, how much will it need to borrow?

Banner's projected discretionary financing needed for 2018 is

Discretionary sources of financing are those sources that vary automatically with a firm's level of sales.

Broad Cloth, Inc.'s average collection period is 15 days. The vice-president of marketing has projected credit sales of $2. million for October, $2.5 million for November and $3 million for December. Purchases equal 60% of sales and are made one month in advance of budgeted sales. Payments are made 1 month after the date of purchase. Compute payments for purchases for the months of November and December.

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

Holding other things constant, a firm's "discretionary financing needed" (the additional funds required in order to finance the firm) would be reduced if the firm experienced an increase in which of the following?

Major differences between a cash budget and a pro forma income statement include

Long-term financial plans must include capital expenditures.

What is the most important ingredient in developing a firm's financial plan?

The first step involved in predicting financing needs is