Exam 4: Financial Planning and Forecasting

In 20X3, the Fillmore Company's sales were $12.0 million. Its balance sheet at year end 20X3 is shown below. Fillmore's 20X4 sales are expected to be $15 million and its 20X5 sales are expected to be $18 million. Earnings after tax in both years is expected to be 5.0% of sales, and annual dividends of $250,000 are expected to be paid in both 20X4 and 20X5. The company presently has excess plant and equipment capacity. As a result, assume that the net fixed asset figure on the balance sheet will remain constant for both 20X4 and 20X5. Assuming that the ratios of assets (except fixed assets, net) to sales and accounts payable to sales in 20X3 remain the same in 20X4 and 20X5, calculate the total amount, i.e., one number, of external financing required during the 2 year period from 20X4 through 20X5, using the percentage of sales method.

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.

All the following current liabilities normally vary directly with the sales except:

Generally, which of the following non-cash charges is/are added to earnings after tax to calculate the after-tax cash flow? I. Depreciation II. Deferred taxes

The financial statement that shows the effects of a company's operating, investing, and financing activities on its cash balance is known as the:

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

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

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:

Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends.

Cash and cash equivalents include: I. Money market accounts II. Currency on hand.

Which of the following shows the effects of a company's operating, investing, and financing activities on its cash flows?

After-tax cash flow equals:

Cash budgeting can be employed effectively by management to

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?

Pro forma financial statements display the financial situation of a firm based on:

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

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.

The financial plan that is a "blueprint" detailing where the firm wants to be at some future point in time is the:

Getrag expects its sales to increase 20% next year from its current level of $4.7 million. Getrag has current assets of $660,000, net fixed assets of $1.5 million, and current liabilities of $462,000. All assets are expected to grow proportionately with sales. If Getrag has a net profit margin of 10%, what additional financing will be needed to support the increase in sales? Getrag does not pay dividends.

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 Ship-to-Shore's after-tax cash flow for last year?