Question 1

Based on the information in Table 1, what is Dorian Industries' ending cash balance (before borrowing) in March?

Accepted Answer

A)  $10,000 
B)  $25,000 
C)  $20,000 
D)  ($30,000) 
A)  $10,000 
B)  $25,000 
C)  $20,000 
D)  ($30,000)

Question 2

The primary purpose of a cash budget is to

Accepted Answer

A)  determine the level of investment in current and fixed assets. 
B)  determine accounts payable. 
C)  provide a detailed plan of future cash flows. 
D)  determine the estimated income tax for the year. 
A)  determine the level of investment in current and fixed assets. 
B)  determine accounts payable. 
C)  provide a detailed plan of future cash flows. 
D)  determine the estimated income tax for the year.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Based on the information in Table 2, what was Fielding's projected loss for March?

Accepted Answer

A)  $(184,000) 
B)  $(110,000) 
C)  $(84,000) 
D)  None of the above 
A)  $(184,000) 
B)  $(110,000) 
C)  $(84,000) 
D)  None of the above

Question 5

Wolf Den Craft Beers projects that it will need $50 million in total assets to meet the sales projection of $65 million. The pro forma balance sheet shows accounts payable, $8 million, accrued expenses, $2 million, long-term debt, $10 million and equity, $25 million. If Wolf Den decides to meet discretionary financing needs with 5 year notes payable, how much will it need to borrow?

Accepted Answer

A)  $10 million 
B)  $0, the firm will have excess funds 
C)  $5 million. 
D)  Cannot be calculated without knowing the net profit margin. 
A)  $10 million 
B)  $0, the firm will have excess funds 
C)  $5 million. 
D)  Cannot be calculated without knowing the net profit margin.

Question 6

Your firm is trying to determine its cash disbursements for the next two months (June and July). In any month, the firm makes purchases of 60% of that month's sales, which are paid the following month. In addition, the firm incurs the following costs every month and pays for them in the month the expenses are incurred: wages/salaries of $10,000, rent of $4,000, and miscellaneous cash expenses of $1,000. Depreciation amortized on a monthly basis is $2,000. June's sales are expected to be $100,000, and July's sales are expected to be $150,000. Cash disbursements for the month of July are expected to be

Accepted Answer

A)  $105,000. 
B)  $107,000. 
C)  $77,000. 
D)  $75,000. 
A)  $105,000. 
B)  $107,000. 
C)  $77,000. 
D)  $75,000.

Question 7

If the firm's current fixed assets are sufficient to support the projected level of new sales, then these assets would be projected to remain unchanged for the forecast period.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about the percent-of-sales method of financial forecasting is true?

Accepted Answer

A)  It is the least commonly used method of financial forecasting. 
B)  It is a much more precise method of financial forecasting than a cash budget would be. 
C)  It involves estimating the level of an expense, asset, or liability for a future period as a percent of the forecast for sales revenues. 
D)  It projects all liabilities as a fixed percentage of sales. 
A)  It is the least commonly used method of financial forecasting. 
B)  It is a much more precise method of financial forecasting than a cash budget would be. 
C)  It involves estimating the level of an expense, asset, or liability for a future period as a percent of the forecast for sales revenues. 
D)  It projects all liabilities as a fixed percentage of sales.

Question 9

Apple Two Enterprises expects to generate sales of $5,950,000 for fiscal 2018; sales were $3,450,000 in fiscal 2017. Assume the following figures for the fiscal year ending 2017: 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 cash for the fiscal year ending 2018.

Accepted Answer

A)  $120,725 
B)  $75,003 
C)  $216,418 
D)  $319,604 
A)  $120,725 
B)  $75,003 
C)  $216,418 
D)  $319,604

Question 10

The strategic plan is the most specific and detailed part of the planning process.

Accepted Answer

A) True 
 B)False

Question 11

Home to House Distributors is preparing a cash budget. The initial conclusion is that the firm will need to borrow more money than its bank is willing to lend. Which of the following actions could Home to House Distributors perform to reduce its need for bank financing this year?

Accepted Answer

A)  Pay cash for purchasing inventory instead of having to rely on trade credit 
B)  Prepay next year's quarterly income tax payments 
C)  Try to collect the firm's accounts receivable faster 
D)  Purchase larger quantities of inventory to take advantage of trade discounts 
A)  Pay cash for purchasing inventory instead of having to rely on trade credit 
B)  Prepay next year's quarterly income tax payments 
C)  Try to collect the firm's accounts receivable faster 
D)  Purchase larger quantities of inventory to take advantage of trade discounts

Question 12

Pro forma financial statements are a required part of the firm's tax returns.

Accepted Answer

A) True 
 B)False

Question 13

Banner's projected fixed assets for 2018 are

Accepted Answer

A)  $1,120,000. 
B)  $1,260,000. 
C)  $1,000,000. 
D)  $2,380,000. 
A)  $1,120,000. 
B)  $1,260,000. 
C)  $1,000,000. 
D)  $2,380,000.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The cash budget can be used to provide an estimate of the firm's future financing needs.

Accepted Answer

A) True 
 B)False

Question 16

Discuss the basic functions that budgets perform for a firm.

Accepted Answer

The budget is a short-term financial pla

Question 17

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

Accepted Answer

A)  If assets must be purchased in large, discrete quantities 
B)  When the firm has excess capacity. 
C)  When assets can be leased rather than purchased. 
D)  Both A & B. 
A)  If assets must be purchased in large, discrete quantities 
B)  When the firm has excess capacity. 
C)  When assets can be leased rather than purchased. 
D)  Both A & B.

Question 18

The percent-of-sales method is a commonly used method for estimating a firm's financing needs.

Accepted Answer

A) True 
 B)False

Question 19

The key ingredient in a firm's financial planning is the sales forecast.

Accepted Answer

A) True 
 B)False

Based on the information in Table 1, what is Dorian Industries' ending cash balance (before borrowing) in March?

The primary purpose of a cash budget is to

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

Based on the information in Table 2, what was Fielding's projected loss for March?

If the firm's current fixed assets are sufficient to support the projected level of new sales, then these assets would be projected to remain unchanged for the forecast period.

Which of the following statements about the percent-of-sales method of financial forecasting is true?

The strategic plan is the most specific and detailed part of the planning process.

Home to House Distributors is preparing a cash budget. The initial conclusion is that the firm will need to borrow more money than its bank is willing to lend. Which of the following actions could Home to House Distributors perform to reduce its need for bank financing this year?

Pro forma financial statements are a required part of the firm's tax returns.

Banner's projected fixed assets for 2018 are

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

The cash budget can be used to provide an estimate of the firm's future financing needs.

Discuss the basic functions that budgets perform for a firm.

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

The percent-of-sales method is a commonly used method for estimating a firm's financing needs.

The key ingredient in a firm's financial planning is the sales forecast.

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements, Taxes, and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 17: Financial Forecasting and Planning

Based on the information in Table 1, what is Dorian Industries' ending cash balance (before borrowing) in March?

The primary purpose of a cash budget is to

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

Based on the information in Table 2, what was Fielding's projected loss for March?

If the firm's current fixed assets are sufficient to support the projected level of new sales, then these assets would be projected to remain unchanged for the forecast period.

Which of the following statements about the percent-of-sales method of financial forecasting is true?

The strategic plan is the most specific and detailed part of the planning process.

Home to House Distributors is preparing a cash budget. The initial conclusion is that the firm will need to borrow more money than its bank is willing to lend. Which of the following actions could Home to House Distributors perform to reduce its need for bank financing this year?

Pro forma financial statements are a required part of the firm's tax returns.

Banner's projected fixed assets for 2018 are

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

The cash budget can be used to provide an estimate of the firm's future financing needs.

Discuss the basic functions that budgets perform for a firm.

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

The percent-of-sales method is a commonly used method for estimating a firm's financing needs.

The key ingredient in a firm's financial planning is the sales forecast.

Getting Started-Principles of Finance

Firms and the Financial Market

Understanding Financial Statements, Taxes, and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Working Capital Management

International Business Finance

Corporate Risk Management

Filters