Exam 11: Forecasting Financial Requirements

Jake has prepared pro forma financial statements for his landscaping business.At the minimum,how often should he check results and make modifications as needed?

Andrea is working on forecasting her financial statements for her consulting business.Discuss three suggestions for Andrea to make her forecasting more effective.

Cash flow can be projected in two ways: using the income statement to project cash flows or preparing a cash budget.

Mark wants to make sure he does not run out of cash so he is preparing a monthly cash budget.After determining the percentage of cash collections by month,he should

Which source of information would be the most inclusive for an entrepreneur determining information to complete the financial statements?

Faye is developing a statement of cash flows for Yummy Gummies,a candy company that she owns.She has a net profit of $15,000 and an increase in inventory of $7,500.She took out a line of credit with her bank to finance her business and has decreased accounts receivable by $4,000.She has also invested in equipment for shaping her candy.How will the above information be listed on the cash flow statement?

Even though Miriam projected an annual positive cash flow,she may run out of cash if:

What are the categories that constitute working capital versus net working capital?

D&R Products forecast a first year asset requirement of $143,500;therefore,the total debt requirement is

Match the term with its definition. a.Cash budget b.Current ratio c.Line of credit d.Net working capital e.pro forma financial statements f.percentage-of-sales technique g.spontaneous debt financing -A listing of cash receipts and cash disbursements,usually for a relatively short time period

Financial projections should be limited to the income statement to prevent information overload on lenders and investors.

The conventional measure of liquidity is the current ratio,which compares the current assets to current liabilities on a relative basis.

Profits that are retained within the company rather than being distributed to the owners are referred to as retained income.

Spontaneous debt financing results when accounts payable increase in proportion to a firm's profits.

Match the term with its definition. a.Cash budget b.Current ratio c.Line of credit d.Net working capital e.pro forma financial statements f.percentage-of-sales technique g.spontaneous debt financing -A short-term loan

Mark follows the cash budget like it was carved in stone.He has fallen prey to the one real danger in over-reliance on a cash budget:

Projecting financials may present a challenge because in a startup business,

Investors would like to know if Arthur's new business will have adequate cash flows.Arthur can provide this information in

An entrepreneur should always project at least two scenarios for financial forecasting and budgeting: best case and worst case

Tony operates a computer retail business.Based on the industry,how often should sales projections be for the company in projecting sales?