Question 1

Which of the following will decrease the additional funds needed from external sources?

Accepted Answer

A)  The firm's profit margin decreases. 
B)  The firm's retention ratio is decreased. 
C)  The firm becomes less capital intensive. 
D)  The firm reduces its usage of trade credit. 
A)  The firm's profit margin decreases. 
B)  The firm's retention ratio is decreased. 
C)  The firm becomes less capital intensive. 
D)  The firm reduces its usage of trade credit.

Question 2

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?
$$\begin{array} { r c c c c c c } 
\text { Ye:r } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 800,000 & \$ 810,000 & \$ 825,000 & \$ 835,000 & \$ 850,000
\end{array}$$

Accepted Answer

A)  $850,000 
B)  $860,000 
C)  $924,000 
D)  $874,000 
A)  $850,000 
B)  $860,000 
C)  $924,000 
D)  $874,000

Question 3

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?
$$\begin{array} { c c c c c c c } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,500,000 & \$ 1,750,000 & \$ 1,400,000 & \$ 2,000,000 & 2,200,000
\end{array}$$

Accepted Answer

A)  $2,100,000 
B)  $2,200,000 
C)  $1,780,000 
D)  $1,730,000 
A)  $2,100,000 
B)  $2,200,000 
C)  $1,780,000 
D)  $1,730,000

Question 4

Which of the following are considered "chunky" or "lumpy" assets?

Accepted Answer

A)  Total assets 
B)  Current assets 
C)  Fixed assets 
D)  Additional funds needed (AFN) 
A)  Total assets 
B)  Current assets 
C)  Fixed assets 
D)  Additional funds needed (AFN)

Question 5

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 dollars)?

Accepted Answer

A)  $187,900 
B)  $299,900 
C)  $328,800 
D)  $364,100 
A)  $187,900 
B)  $299,900 
C)  $328,800 
D)  $364,100

Question 6

Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets. The firm's chief financial officer is projecting a 25 percent increase in sales. The firm has $1.25 million in accounts payable and $1,500,000 in long-term debt (bonds). The firm currently pays out 20 percent of its net income to shareholders. Assuming that all assets and spontaneous liabilities are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

Accepted Answer

A)  $902,700 
B)  $812,500 
C)  $821,000 
D)  $746,600 
A)  $902,700 
B)  $812,500 
C)  $821,000 
D)  $746,600

Question 7

Which of the following defines the term deseasonalize?

Accepted Answer

A)  To use pro forma statements to determine future years' forecasts 
B)  To remove the effects of seasonality from historic data 
C)  To remove fixed asset growth that does not tie into sales growth 
D)  To fix asset growth to smooth out the seasonality of sales growth 
A)  To use pro forma statements to determine future years' forecasts 
B)  To remove the effects of seasonality from historic data 
C)  To remove fixed asset growth that does not tie into sales growth 
D)  To fix asset growth to smooth out the seasonality of sales growth

Question 8

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 $15 million using the average approach?

Accepted Answer

A)  11.00 percent 
B)  20.00 percent 
C)  26.67 percent 
D)  33.33 percent 
A)  11.00 percent 
B)  20.00 percent 
C)  26.67 percent 
D)  33.33 percent

Question 9

Suppose that Team Industries, Inc. currently has the balance sheet shown as follows, and that sales for the year just ended were $3 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $6 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?
$$\begin{array} { l r l l l } 
 \text { Assets } & & { \text { Liabilities and Equity } } \
\text { Current Assets } & \$ 2,000,000 & \text { Current Liabilities } & \$ 2,000,000 \
\text { Fixed Assets } &  2,500,000 & \text { Long-tern Debt } & 1,500,000 \
& & \text { Equity } & 1,000,000 \
\text { Total Assets } & \$ 4,500,000 & \text { Total Liabilities ard Equity } & \$ 4,500,000
\end{array}$$

Accepted Answer

A)  $2,140,000 
B)  $2,320,000 
C)  $2,500,000 
D)  $4,500,000 
A)  $2,140,000 
B)  $2,320,000 
C)  $2,500,000 
D)  $4,500,000

Question 10

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?
$$\begin{array} { l l l c l l l } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 50,000 & \$  100,000 & \$ 110,000 & \$ 150,000 & \$ 165,000
\end{array}$$

Accepted Answer

A)  $115,000 
B)  $140,000 
C)  $165,000 
D)  $180,000 
A)  $115,000 
B)  $140,000 
C)  $165,000 
D)  $180,000

Question 11

Which of the following is the amount of external financing a firm must seek in order to change the asset base as necessary to support a different level of sales?

Accepted Answer

A)  Additional funds needed 
B)  Capital intensity ratio 
C)  Current ratio 
D)  Spontaneous assets 
A)  Additional funds needed 
B)  Capital intensity ratio 
C)  Current ratio 
D)  Spontaneous assets

Question 12

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $15 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, how much will spontaneous liabilities increase with the increase in sales?
$$\begin{array} { l r l r r } 
 \text { Assets } && { \text { Iiabilities ard Equity } } \
\text { Current Assets } & \$ 2,000,000 & \text { Current Liabilities } & \$ 2,500,000 \
\text { Fixed Assets } &  8,000,000 & \text { Long-tern Debt } &1,5000,000 \
& & \text { Equity } & 6,000,000 \
\text { Total Assets } & \$ 10,000,000 & \text { Total Liabilities and Equity } & \$ 10,000,000
\end{array}$$

Accepted Answer

A)  $1,950,000 
B)  $2,240,000 
C)  $2,366,000 
D)  $1,166,667 
A)  $1,950,000 
B)  $2,240,000 
C)  $2,366,000 
D)  $1,166,667

Question 13

________ is the process of determining where a firm is going over the next year or more, how it's going to get there, and how it will know if it gets there or not.

Accepted Answer

A)  financial planning 
B)  strategic planning. 
C)  base case 
D)  base case projections 
A)  financial planning 
B)  strategic planning. 
C)  base case 
D)  base case projections

Question 14

Which of the following is used to remove the effects of seasonality from historic data?

Accepted Answer

A)  Average approach 
B)  Base case approach 
C)  Deseasonalized approach 
D)  Pro forma approach 
A)  Average approach 
B)  Base case approach 
C)  Deseasonalized approach 
D)  Pro forma approach

Question 15

________ is the amount of external financing a firm must seek in order to change the assets base as necessary to support a different level of sales.

Accepted Answer

A)  additional funds needed 
B)  capital intensity ratio 
C)  trade credit 
D)  spontaneous liabilities ratio 
A)  additional funds needed 
B)  capital intensity ratio 
C)  trade credit 
D)  spontaneous liabilities ratio

Question 16

Which of the following will increase the additional funds needed from external sources?

Accepted Answer

A)  The firm's profit margin increases. 
B)  The firm's dividend payout ratio decreases. 
C)  The firm's debt ratio increases. 
D)  The firm becomes more capital intensive. 
A)  The firm's profit margin increases. 
B)  The firm's dividend payout ratio decreases. 
C)  The firm's debt ratio increases. 
D)  The firm becomes more capital intensive.

Question 17

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 if it was determined that years 2013 and 2014 were "stale"?
$$\begin{array} { c c c c c c c } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,900,000 & \$ 2,100,000 & \$ 2,700,000 & \$ 2,800,000 & \$ 3,000,000
\end{array}$$

Accepted Answer

A)  $1,900,000 
B)  $2,500,000 
C)  $2,833,333 
D)  $3,000,000 
A)  $1,900,000 
B)  $2,500,000 
C)  $2,833,333 
D)  $3,000,000

Question 18

Forecasted sales drive all of the following EXCEPT

Accepted Answer

A)  the amount of assets needed. 
B)  the liabilities needed. 
C)  the external funds needed. 
D)  earnings per share on the annual report. 
A)  the amount of assets needed. 
B)  the liabilities needed. 
C)  the external funds needed. 
D)  earnings per share on the annual report.

Question 19

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, how much will spontaneous liabilities increase with the increase in sales?
$$\begin{array} { l r l r r } 
 \text { Assets } && { \text { Iiabilities ard Equity } } \
\text { Current Assets } & \$ 500,000 & \text { Current Liabilities } & \$ 200,000 \
\text { Fixed Assets } &  250,000 & \text { Long-tern Debt } &300,000 \
& & \text { Equity } & 250,000 \
\text { Total Assets } & \$ 750,000 & \text { Total Liabilities and Equity } & \$ 750,000
\end{array}$$

Accepted Answer

A)  $100,000 
B)  $250,000 
C)  $200,000 
D)  $500,000 
A)  $100,000 
B)  $250,000 
C)  $200,000 
D)  $500,000

Question 20

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?
$$\begin{array} { c c c c c c c } 
\text { Year } & 2013 & 2014 & 2015 & 2016 & 2017 \
\text { Sales } & \$ 1,500,000 & \$ 1,750,000 & \$ 1,400,000 & \$ 2,000,000 & 1,780,000
\end{array}$$

Accepted Answer

A)  $1,780,000 
B)  $1,650,000 
C)  $2,100,000 
D)  $1,686,000 
A)  $1,780,000 
B)  $1,650,000 
C)  $2,100,000 
D)  $1,686,000

Which of the following will decrease the additional funds needed from external sources?

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? Ye:r 2013 2014 2015 2016 2017 Sales \ 800,000 \ 810,000 \ 825,000 \ 835,000 \ 850,000

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017 Sales \ 1,500,000 \ 1,750,000 \ 1,400,000 \ 2,000,000 2,200,000

Which of the following are considered "chunky" or "lumpy" assets?

Which of the following defines the term deseasonalize?

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 $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 \ 50,000 \ 100,000 \ 110,000 \ 150,000 \ 165,000

Which of the following is the amount of external financing a firm must seek in order to change the asset base as necessary to support a different level of sales?

________ is the process of determining where a firm is going over the next year or more, how it's going to get there, and how it will know if it gets there or not.

Which of the following is used to remove the effects of seasonality from historic data?

________ is the amount of external financing a firm must seek in order to change the assets base as necessary to support a different level of sales.

Which of the following will increase the additional funds needed from external sources?

Forecasted sales drive all of the following EXCEPT

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017 Sales \ 1,500,000 \ 1,750,000 \ 1,400,000 \ 2,000,000 1,780,000

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 15: Financial Planning and Forecasting

Which of the following will decrease the additional funds needed from external sources?

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? Ye:r 2013 2014 2015 2016 2017 Sales \ 800,000 \ 810,000 \ 825,000 \ 835,000 \ 850,000

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017 Sales \ 1,500,000 \ 1,750,000 \ 1,400,000 \ 2,000,000 2,200,000

Which of the following are considered "chunky" or "lumpy" assets?

Which of the following defines the term deseasonalize?

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 $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 \ 50,000 \ 100,000 \ 110,000 \ 150,000 \ 165,000

Which of the following is the amount of external financing a firm must seek in order to change the asset base as necessary to support a different level of sales?

________ is the process of determining where a firm is going over the next year or more, how it's going to get there, and how it will know if it gets there or not.

Which of the following is used to remove the effects of seasonality from historic data?

________ is the amount of external financing a firm must seek in order to change the assets base as necessary to support a different level of sales.

Which of the following will increase the additional funds needed from external sources?

Forecasted sales drive all of the following EXCEPT

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017 Sales \ 1,500,000 \ 1,750,000 \ 1,400,000 \ 2,000,000 1,780,000

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters