Exam 4: Financial Planning and Forecasting

ECG Monitors is forecasting that sales next year will be $8,640,000, a 20 percent increase over current sales.ECG has total assets of $3,840,000 and all assets will increase proportionately with sales.Of the current liabilities, only accounts payable (now $740,000) will increase with sales.What total financing will be needed by ECG to support the expected sales increase?

The kind of analysis that consists of rerunning the model to determine the effect on the output variables of changes in the input variables is

In the percent-of-sales forecasting method, which of the following is (are) assumed to increase proportionately with sales?

Short-term operational plans are generally conducted over what time frame?

The Financial Accounting Standard Board (FASB) requires companies to prepare their statement of cash flows using the:

What is the difference between the direct method and the indirect method of presenting the cash flow from operations?

In developing a firm's financial plan, the firm develops a strategic plan and an operational plan.What is the difference between a strategic plan and an operational plan?

An example of an investing activity is:

Ship-to-Shore earned $280,000 after taxes last year.Its expenses included depreciation of $55,000, interest expenses of $40,000 and deferred taxes of $20,000.The company also purchased two new fresh water fishing boats for $40,000 ($20,000) each.What is Ship­to­Shore's after­tax cash flow for last year?

The first step in cash budget preparation is the

Cash budgeting can be employed effectively by management to

To decrease the additional financing needed to support an increase in sales, management can

The first step in the preparation of a cash budget is:

When preparing a cash budget, once a firm has estimated its cash receipts the firm must

Operational plans are generally conducted at two levels.Which length of time is considered long-term?

Why would a firm want to develop a cash budget since it is only a projection of cash inflows and outflows over some future period of time?

is the statistical technique that helps the analyst classify observations (firms) into two or more predetermined groups based on certain characteristics of the observation.

In the percent-of-sales forecasting method, all of the following balance sheet and income statement items are assumed to increase proportionately with sales EXCEPT:

The percentage of sales forecasting method is used by management to forecast the amount of

Using a cash budget is more useful than the percentage of sales method because: