Exam 16: Financial Planning and Control

A firm utilizes 75 percent of its plant capacity to produce the current year's sales of $3,000 million. Which of the following is the full-capacity sales of the firm?

The financial breakeven point is the level of _____ at which earnings per share (EPS) is equal to zero.

Which of the following statements is true of financial forecasts in the financial planning process?

Compuvac Company has just completed its first- year forecast using the projected balance sheet method. The firm has determined that it needs $4 million in new debt that can be sold at par with a 10% annual coupon. Additionally, the firm will sell 500,000 shares of new common equity at $18.10 per share. Next year's expected dividend is $0.48 per share. The firm expects that taxes will be $160,000 lesser under the second year than they were under the first pass based on a 40% tax rate. Given this information, what is the incremental change in additional funds needed (AFN) for Compuvac from the first year to the second pass?

Which of the following mathematical expressions is used to compute the degree of financial leverage at a particular level of earnings before interest and tax (EBIT)? Assume that the preferred stockholders receive no dividends.

Which of the following actions is taken to reduce the collections period for receivables of a firm?

If a firm is operating at its full capacity, any increase in sales will require _____.

Trident Food Corporation generated the following income statement for the most recent fiscal year: Sales revenues   $150,000 Variable cost of sales   (112,500) Gross profit   37,500 Fixed operating costs   (24,000) Net operating income (EBIT) 13,500 Interest (10,000) Earnings before taxes 3,500 Taxes (40%) (1,400) Net income 2,100 Which of the following is the degree of total leverage for Trident Foods?

Which of the following is most likely to increase spontaneously with an increase in sales?

The relationship between sales volume and operating profitability is explored in _____.