Question 1

A good operational plan incorporates a plan for:

Accepted Answer

A) the unionization of its business. 
B) a solid organizational chart with detailed job descriptions. 
C) the resources a firm will need to obtain its long term objectives. 
D) all of the answers are correct 
A) the unionization of its business. 
B) a solid organizational chart with detailed job descriptions. 
C) the resources a firm will need to obtain its long term objectives. 
D) all of the answers are correct C

Question 2

Why would a firm experience cash flow difficulties immediately after a good sales period?

Accepted Answer

Inventory has been sold and must be replenished.However, many sales have been conducted on an accounts receivable basis and collections have not yet been received.In addition, accounts payable may become due before cash is actually received.All of this leads to cash flow difficulties.

Question 3

Dippity Doo-Dah Party Dips has revenues of $50,000, general & administrative expenses of $35,000, interest expense of $4,000 and depreciation expense of $4200.The firm is in the 38% tax bracket.What would be the firm's cash flow from operations?

Accepted Answer

A) $4216 
B) $4000 
C) $8416 
D) $6,800 
A) $4216 
B) $4000 
C) $8416 
D) $6,800 C

Question 4

Peerless believes that its sales next year will increase 20 percent from the current level of $800,000.Management calculates that assets must increase $110,000 to support the new sales level, and current liabilities will increase $70,000.What total financing will be needed?

Accepted Answer

A) $40,000 
B) $1,600 
C) $33,600 
D) $8,000 
A) $40,000 
B) $1,600 
C) $33,600 
D) $8,000

Question 5

Last year Molex's net cash provided by operating activities was $14.1 million and its net cash used by investing activities was $20.7 million.If net cash provided by financing activities was $9.8 million, what was the net increase (or decrease) in cash and cash equivalents during the year? Molex started the year with $2.1 million in cash.

Accepted Answer

A) $44.6 million 
B) $3.2 million 
C) $25.0 million 
D) $5.3 million 
A) $44.6 million 
B) $3.2 million 
C) $25.0 million 
D) $5.3 million

Question 6

Which of the following is an example of a deterministic model?

Accepted Answer

A) profit optimization model 
B) budget simulator 
C) probabilistic set 
D) discriminant model 
A) profit optimization model 
B) budget simulator 
C) probabilistic set 
D) discriminant model

Question 7

Generally, which of the following non-cash charges is/are added to earnings after tax to calculate the after-tax cash flow?

Accepted Answer

A) Only statement I is correct 
B) Only statement II is correct 
C) Both statements I and II are correct 
D) Neither statement I nor II is correct 
A) Only statement I is correct 
B) Only statement II is correct 
C) Both statements I and II are correct 
D) Neither statement I nor II is correct

Question 8

Financial planning models have two classifications.What are they and how do they differ from each other?

Accepted Answer

The two models are deterministic and pro

Question 9

The main advantage of deterministic models is that they

Accepted Answer

A) provide the user with more useful information than other models 
B) allow the user to maximize some objective function 
C) allow the user to perform sensitivity analyses quickly 
D) allow the user to maximize or minimize some objective function 
A) provide the user with more useful information than other models 
B) allow the user to maximize some objective function 
C) allow the user to perform sensitivity analyses quickly 
D) allow the user to maximize or minimize some objective function

Question 10

Jones Company sales last year were $25 million and its total assets were $8 million.Accounts payable were $2 million and common stock and retained earnings were $5 million.Jones sales are forecasted to be $30 million this year, earnings after tax are expected to be 3% of sales, and dividends of $250,000 are expected to be paid.Assuming that the ratio of assets to sales and current liabilities to sales remain the same this year as last year, determine the amount of additional financing required.

Accepted Answer

A) $550,000 
B) $1,200,000 
C) $300,000 
D) None of the answers is correct 
A) $550,000 
B) $1,200,000 
C) $300,000 
D) None of the answers is correct

Question 11

In using the percentage of sales forecasting method the assumption is that

Accepted Answer

A) there is a direct relationship between long-term debt and sales 
B) inventories will increase proportionately with sales 
C) there is a direct relationship between notes payable and sales 
D) retained earnings will increase proportionately with sales 
A) there is a direct relationship between long-term debt and sales 
B) inventories will increase proportionately with sales 
C) there is a direct relationship between notes payable and sales 
D) retained earnings will increase proportionately with sales

Question 12

The financial forecasting and planning model that is becoming increasingly popular because they often provide financial decision makers with more useful information than other models is

Accepted Answer

A) the deterministic model 
B) the probabilistic model 
C) the optimization model 
D) sensitivity analysis 
A) the deterministic model 
B) the probabilistic model 
C) the optimization model 
D) sensitivity analysis

Question 13

A firm's operational plan states objectives that define where the firm wants to be at the end of the planning period.These objectives must be:

Accepted Answer

A) specific. 
B) flexible. 
C) vague. 
D) agreed upon by the union workers. 
A) specific. 
B) flexible. 
C) vague. 
D) agreed upon by the union workers.

Question 14

An operational plan is necessary to determine what the firm wants to be at some future point in time.What does an operational plan consist of?

Accepted Answer

1.a marketing plan
2

Question 15

Calculate United's total assets if the firm expects sales to grow by 15% this year and the earnings after tax will be $50,000.United paid $20,000 in dividends last year and expects to increase dividends 10% this year.The firm will need additional financing of $25,000 to finance the expected growth.

Accepted Answer

A) $393,333 
B) $590,000 
C) $226,667 
D) $616,000 
A) $393,333 
B) $590,000 
C) $226,667 
D) $616,000

Question 16

In considering financial planning, the type of planning that focuses more on the overall direction of the business and the industry is:

Accepted Answer

A) Deterministic 
B) Strategic 
C) Operational 
D) Probabilistic 
A) Deterministic 
B) Strategic 
C) Operational 
D) Probabilistic

Question 17

Great Subs believes it can increase sales by 50% without any increase in net fixed assets.Earnings after tax are expected to be $2,000.The company pays no dividends.What additional financing will Subs need to finance this growth? Subs' balance sheet currently is as follows:
$$\begin{array} { | l | r | l | r | } 
\hline \text { Cash } & \mathbf { 2 , 5 0 0 } & \text { Accaunts Payahle } & \text { 5,600 } \
\hline \text { Accaunts Rec. } & 4,400 & \text { Nater Payable } & 10,000 \
\hline \text { Inventory } & 6,000 & \text { Lang-term Debt } & 15,000 \
\hline \text { Fixed As5ets, net } & 47,700 & \text { Stockholde's Equity } & 30,000 \
\hline & \mathbf { 8 0 , 6 0 0 } & & \mathbf { 3 0 , 6 0 0 } \
\hline
\end{array}$$

Accepted Answer

A) $3,350 surplus -- no additional financing needed 
B)  $1,650 
C)  $3,650 
D)  None of the answers is correct. 
A) $3,350 surplus -- no additional financing needed 
B)  $1,650 
C)  $3,650 
D)  None of the answers is correct.

Question 18

All of the following are considered inflows from cash EXCEPT:

Accepted Answer

A) Increase in inventory 
B) Deferred taxes and wages 
C) New issues of securities 
D) Increase in accounts payable 
A) Increase in inventory 
B) Deferred taxes and wages 
C) New issues of securities 
D) Increase in accounts payable

Question 19

In preparing a statement of cash flows, the method involves adjusting net income to reconcile it to net cash flows from operating activities.

Accepted Answer

A) direct 
B) indirect 
C) accrual 
D) none of the answers is correct 
A) direct 
B) indirect 
C) accrual 
D) none of the answers is correct

Question 20

The is (are) used to forecast the amount of additional financing (i.e., cash) a company will need in some future period.

Accepted Answer

A) percentage of sales forecasting method 
B) pro forma statement of cash flows 
C) both percentage of sales forecasting method and pro forma statement of cash flows 
D) none of the answers is correct 
A) percentage of sales forecasting method 
B) pro forma statement of cash flows 
C) both percentage of sales forecasting method and pro forma statement of cash flows 
D) none of the answers is correct

Exam 4: Financial Planning and Forecasting

A good operational plan incorporates a plan for:

Why would a firm experience cash flow difficulties immediately after a good sales period?

Dippity Doo-Dah Party Dips has revenues of $50,000, general & administrative expenses of $35,000, interest expense of $4,000 and depreciation expense of $4200.The firm is in the 38% tax bracket.What would be the firm's cash flow from operations?

Peerless believes that its sales next year will increase 20 percent from the current level of $800,000.Management calculates that assets must increase $110,000 to support the new sales level, and current liabilities will increase $70,000.What total financing will be needed?

Which of the following is an example of a deterministic model?

Generally, which of the following non-cash charges is/are added to earnings after tax to calculate the after-tax cash flow?

Financial planning models have two classifications.What are they and how do they differ from each other?

The main advantage of deterministic models is that they

In using the percentage of sales forecasting method the assumption is that

The financial forecasting and planning model that is becoming increasingly popular because they often provide financial decision makers with more useful information than other models is

A firm's operational plan states objectives that define where the firm wants to be at the end of the planning period.These objectives must be:

An operational plan is necessary to determine what the firm wants to be at some future point in time.What does an operational plan consist of?

Calculate United's total assets if the firm expects sales to grow by 15% this year and the earnings after tax will be $50,000.United paid $20,000 in dividends last year and expects to increase dividends 10% this year.The firm will need additional financing of $25,000 to finance the expected growth.

In considering financial planning, the type of planning that focuses more on the overall direction of the business and the industry is:

All of the following are considered inflows from cash EXCEPT:

In preparing a statement of cash flows, the method involves adjusting net income to reconcile it to net cash flows from operating activities.

The is (are) used to forecast the amount of additional financing (i.e., cash) a company will need in some future period.

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

The Time Value of Money

A: The Time Value of Money

Fixed-Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

A: Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital, Capital Structure, and Dividend Policy

Capital Structure Concepts

Capital Structure Management in Practice

A: Capital Structure Management in Practice

Dividend Policy

Working Capital Management

The Management of Cash and Marketable Securities

The Management of Accounts Receivable and Inventories

Lease and Intermediate-Term Financing

Financing with Derivatives

A: Financing with Derivatives

Risk Management

International Financial Management

Corporate Restructuring

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