Exam 15: Financial Planning and Forecasting

Silly Putty Inc. has had sales of $12 million, $17 million, and $16 million for each of the last three years. What would be the MAPE if the actual sales were $15 million using the naïve approach?

Which of the following defines iterative calculation?

Suppose that PBJ Industries, Inc. currently has the balance sheet shown as follows, and that sales for the year just ended were $10 million. The firm also has a profit margin of 10 percent, a retention ratio of 25 percent, and expects sales of $12 million next year. If all assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources to fund the expected growth? Assets Liabilities and Equity Current Assets \ 1,000,000 Current Liabilities \ 1,000,000 Fixed Assets 2,000,000 Long-tern Debt 1,000,000 Equity 1,000,000 Total Assets \ 3,000,000 Total Liabilities ard Equity \ 3,000,000

Suppose a firm was planning to greatly reduce its raw materials inventory next year by introducing just-in-time inventory control procedures. Assuming no other changes to the firm's operations, what would this do to AFN?

Which statement is most correct regarding how pro forma financial statements can be used to estimate additional funds needed?

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $1 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $2 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets? Assets Iiabilities ard Equity Current Assets \ 500,000 Current Liabilities \ 200,000 Fixed Assets 250,000 Long-tern Debt 300,000 Equity 250,000 Total Assets \ 750,000 Total Liabilities and Equity \ 750,000

Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $12 million in total assets and $500,000 in current liabilities. The firm currently pays out 25 percent of its net income to shareholders. Assume that all assets and current liabilities are expected to grow with sales. If Goldilochs does not want to rely on any external sources of funds, what is the most sales can grow (in percent)?

Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets and $1 million in current liabilities. The firm currently pays out 75 percent of its net income to shareholders. Assume that all assets and current liabilities are expected to grow with sales. If Goldilochs does not want to rely on any external sources of funds, what is the most sales can grow (in percent)?

ABC Inc. has total assets of $550,000 and a debt ratio of 60 percent. If last year's sales were $950,000 and sales are expected to grow 10 percent in the future, what is ABC Inc. capital intensity ratio?

Silly Putty Inc. has had sales of $12 million, $17 million, and $16 million for each of the last three years. What would be the MAPE if the actual sales were $15 million using the average approach?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach? Year 2013 2014 2015 2016 2017 Sales \ 1,800,000 \ 1,950,000 \ 1,700,000 \ 2,000,000 2,500,000

Suppose that Runner Industries currently has the balance sheet shown as follows, and that sales for the year just ended were $5 million. The firm also has a profit margin of 10 percent, a retention ratio of 20 percent, and expects sales of $7 million next year. If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales, what amount of additional funds will the company need from external sources to fund the expected growth? Assets Liabilities and Equity Current Assets \ 1,500,000 Current Liabilities \ 600,000 Fixed Assets 3,000,000 Long-tem Debt 1,400,000 Equity 2,500,000 Total Assets \ 4,500,000 Total Liabilities ard Equity \ 4,500,000

Financial planning involves estimating projected cash flows, which is useful for all of the following EXCEPT

Which of the following statements is correct?

Which of the following defines MAPE?

Which of the following is a set of financial statements depicting an operating division of a firm's expected financial situation in the foreseeable future under the most reasonable set of assumptions concerning relevant factors?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using regression to estimate a trend? Year 2013 2014 2015 2016 2017 Sales \ 12,000,000 \ 11,800,000 \ 12,200,000 \ 12,400,000 \ 12,300,000

The additional funds needed by the firm can be calculated by assuming which of the following?

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $12 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current liabilities are expected to grow with sales, what is the necessary increase in assets? Assets Iiabilities ard Equity Current Assets \ 2,000,000 Current Liabilities \ 2,500,000 Fixed Assets 8,000,000 Long-tern Debt 1,500,000 Equity 6,000,000 Total Assets \ 10,000,000 Total Liabilities and Equity \ 10,000,000

Silly Putty Inc. has had sales of $10 million, $15 million, and $8 million for each of the last three years. What would be the MAPE if the actual sales were $12 million using the naïve approach?