Exam 4: Financial Planning and Forecasting

In those industries where capacity can be added only in discrete or "lumpy" increments, fixed assets are increased in a ____ manner as sales increase.

The first step in cash budget preparation is the

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

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

ICU has current assets of $800,000 and net fixed assets of $1,400,000. The firm expects its sales to climb 25 percent next year from its current level of $3,500,000. ICU's only current liability is accounts payable of $1,200,000. If both current assets and current liabilities will increase proportionately with sales, what additional financing will be needed by ICU next year? Assume ICU has a net profit margin of 6 percent. An increase in net fixed assets of $500,000 will be required. The firm pays out 50 percent of its earnings as dividends.

Pro forma financial statements show the results of some ____ event rather than a (an) ____ event.

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?