Question 1

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

Accepted Answer

A) The lower the dividend payout,the less a firm will have to reinvest. 
B) The higher the dividend payout,the more discretionary financing a firm will require. 
C) The lower the dividend payout,the more discretionary financing a firm will require. 
D) The higher the dividend payout,the higher the retention percentage. 
A) The lower the dividend payout,the less a firm will have to reinvest. 
B) The higher the dividend payout,the more discretionary financing a firm will require. 
C) The lower the dividend payout,the more discretionary financing a firm will require. 
D) The higher the dividend payout,the higher the retention percentage.

Question 2

What are the key questions that a strategic plan attempts to answer? How does it relate to financial plans?

Accepted Answer

The strategic plan asks such fundamental

Question 3

A discretionary form of financing would be

Accepted Answer

A) notes payable. 
B) accounts payable. 
C) accrued expenses. 
D) none of the above. 
A) notes payable. 
B) accounts payable. 
C) accrued expenses. 
D) none of the above.

Question 4

When forecasting statements,assets always increase proportionately to sales regardless of capacity.

Accepted Answer

A) True 
 B)False

Question 5

Assume that Calamar Corp.has sales of $7.5 million and accounts payable of $450,000.The corporation utilises the percent-of-sales method of financial forecasting.If Calamar is expected to generate sales of $9 million next year,what will the firm's accounts payable be?

Accepted Answer

A) $540,000 
B) $450,000 
C) $405,000 
D) None of the above 
A) $540,000 
B) $450,000 
C) $405,000 
D) None of the above

Question 6

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 7

Cash budget is a synonym for long-term financial plan.

Accepted Answer

A) True 
 B)False

Question 8

The initiation of a major advertising campaign would be an example of an event that would affect past trends in sales when projecting statements.

Accepted Answer

A) True 
 B)False

Question 9

Swings in discretionary financing needed can be caused by

Accepted Answer

A) firm profitability. 
B) the growth rate of sales. 
C) the need to upgrade technology and physical assets from time to time. 
D) all of the above. 
A) firm profitability. 
B) the growth rate of sales. 
C) the need to upgrade technology and physical assets from time to time. 
D) all of the above.

Question 10

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Accepted Answer

A) The payment of accounts payable 
B) The payment of depreciation expense 
C) The payment of accrued income taxes 
D) All of the above 
A) The payment of accounts payable 
B) The payment of depreciation expense 
C) The payment of accrued income taxes 
D) All of the above

Question 11

Short-term financial plans span a period of

Accepted Answer

A) up to five years. 
B) one to three years. 
C) a year or less. 
D) 1 month or less. 
A) up to five years. 
B) one to three years. 
C) a year or less. 
D) 1 month or less.

Question 12

An increase in projected ________ will increase discretionary funds needed.

Accepted Answer

A) cash dividends 
B) sales 
C) retained earnings 
D) both A and B 
A) cash dividends 
B) sales 
C) retained earnings 
D) both A and B

Question 13

Considering each action independently and holding other things constant,which of the following actions would increase a firm's discretionary financing needed (the need for additional capital)?

Accepted Answer

A) A decrease in the firm's accounts receivable average collection period 
B) An increase in the firm's profit margin 
C) A decrease in the firm's inventory turnover 
D) A decrease in the expected growth rate in sales 
A) A decrease in the firm's accounts receivable average collection period 
B) An increase in the firm's profit margin 
C) A decrease in the firm's inventory turnover 
D) A decrease in the expected growth rate in sales

Question 14

One disadvantage of long-term plans is a loss of flexibility in responding to unexpected events.

Accepted Answer

A) True 
 B)False

Question 15

A budget is a forecast of future events.

Accepted Answer

A) True 
 B)False

Question 16

Spontaneous sources of financing implies

Accepted Answer

A) that funding arises automatically in the course of business. 
B) that management has autonomy. 
C) that management has discretion on spending. 
D) that the markets are amenable to share offerings. 
A) that funding arises automatically in the course of business. 
B) that management has autonomy. 
C) that management has discretion on spending. 
D) that the markets are amenable to share offerings.

Question 17

The percentages used in the percent-of-sales method come from pro forma financial statements.

Accepted Answer

A) True 
 B)False

Question 18

The preparation of a cash budget serves which of the following purposes?

Accepted Answer

A) To estimate the amount and timing of cash flows that are needed in order to optimise the price of the firm's ordinary shares 
B) To calculate the amount of future cash flows that would be needed in order to achieve the optimal level of financing during the forecast period 
C) To determine the amount and timing of short-term financing that would be required for the operation of a business during the forecast period 
D) To estimate the amount of sales volume that would be required in order to achieve the break-even point 
A) To estimate the amount and timing of cash flows that are needed in order to optimise the price of the firm's ordinary shares 
B) To calculate the amount of future cash flows that would be needed in order to achieve the optimal level of financing during the forecast period 
C) To determine the amount and timing of short-term financing that would be required for the operation of a business during the forecast period 
D) To estimate the amount of sales volume that would be required in order to achieve the break-even point

Question 19

Au Courant Bakery is a new firm specialising in gluten free pastry products.In attempting to determine what the financial position of the firm should be,the financial manager obtained the following average data for the baking industry for 2014.All data is expressed as a percentage of sales.
Fill in the dollar amounts on Au Courant's pro forma balance sheet assuming 2015 sales are $450,000.
Au Courant Bakery
Pro Forma Balance Sheet
December 31,2015
Cash,2.22% Accounts payable,6.67%
Accounts receivable,2.78% Long-term debt,6.67%
Inventory,3%
Total current assets ? Ordinary equity,?
Fixed assets? Total liabilities and equity,?
Total assets,33%

Accepted Answer

Au Courant Bakery
Pro Forma Balance Shee

Question 20

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.

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

What are the key questions that a strategic plan attempts to answer? How does it relate to financial plans?

A discretionary form of financing would be

When forecasting statements,assets always increase proportionately to sales regardless of capacity.

Assume that Calamar Corp.has sales of $7.5 million and accounts payable of $450,000.The corporation utilises the percent-of-sales method of financial forecasting.If Calamar is expected to generate sales of $9 million next year,what will the firm's accounts payable be?

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.

Cash budget is a synonym for long-term financial plan.

The initiation of a major advertising campaign would be an example of an event that would affect past trends in sales when projecting statements.

Swings in discretionary financing needed can be caused by

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Short-term financial plans span a period of

An increase in projected ________ will increase discretionary funds needed.

Considering each action independently and holding other things constant,which of the following actions would increase a firm's discretionary financing needed (the need for additional capital)?

One disadvantage of long-term plans is a loss of flexibility in responding to unexpected events.

A budget is a forecast of future events.

Spontaneous sources of financing implies

The percentages used in the percent-of-sales method come from pro forma financial statements.

The preparation of a cash budget serves which of the following purposes?

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

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

Share Valuation

Investment Decision Criteria

Analysing 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

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

What are the key questions that a strategic plan attempts to answer? How does it relate to financial plans?

A discretionary form of financing would be

When forecasting statements,assets always increase proportionately to sales regardless of capacity.

Assume that Calamar Corp.has sales of $7.5 million and accounts payable of $450,000.The corporation utilises the percent-of-sales method of financial forecasting.If Calamar is expected to generate sales of $9 million next year,what will the firm's accounts payable be?

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.

Cash budget is a synonym for long-term financial plan.

The initiation of a major advertising campaign would be an example of an event that would affect past trends in sales when projecting statements.

Swings in discretionary financing needed can be caused by

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Short-term financial plans span a period of

An increase in projected ________ will increase discretionary funds needed.

Considering each action independently and holding other things constant,which of the following actions would increase a firm's discretionary financing needed (the need for additional capital)?

One disadvantage of long-term plans is a loss of flexibility in responding to unexpected events.

A budget is a forecast of future events.

Spontaneous sources of financing implies

The percentages used in the percent-of-sales method come from pro forma financial statements.

The preparation of a cash budget serves which of the following purposes?

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

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

Share Valuation

Investment Decision Criteria

Analysing 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