Exam 19: Long-Term Financial Planning

Executives at Fruit Corporation forecast increased sales of 10% over the next year.$2,000,000 of assets will change in constant proportion to sales.If the addition to retained earnings is estimated to be $50,000,determine the required external financing.

Which of the following is not typically included among the three major requirements for effective planning?

A firm cannot expect to expand its profit margin by acquiring one of its own suppliers.

Alternative "What if?" scenarios can be easily accommodated in financial planning by use of:

Which of the following changes will decrease a firm's internal growth rate?

A planning horizon refers to the amount of time necessary to develop the financial plan.

What new investment is required for a firm that projects 12% growth has $400,000 in assets,and retained earnings of $40,000?

Managers sometimes state a target growth rate for sales or earnings per share.Do you think that either makes sense as a corporate goal? If not,why do you think that managers focus on them?

Calculate the rate at which the firm can grow without changing its leverage if its payout ratio is 70%,equity outstanding at the beginning of the year is $900,000,and its net income for the year is $150,000:

How are financial planning models constructed?

Which statement is correct for a firm that forecasts net income of $200,000 and a reduction in retained earnings of $50,000?

What is the required asset turnover for a firm with a 12% profit margin,50% equity,and a 40% dividend payout that wishes to grow at 6% using only internal funding?

With respect to the balance sheet,an increase in equity of $2,000 with an increase in net income to $2,500,leads us to believe:

Planners have determined that sales will increase by 20% next year,and that the profit margin will remain at 10% of sales.Which of the following statements is correct?

What is the effect of growth on the need for external financing?

An all equity financed firm has an asset turnover of 2 and its plowback ratio is 50%.Determine its net profit in order to finance a 8% internally generated growth.

If entering a new market will not produce an immediate net present value,why would financial planners suggest entering this new market?

The phrase,"Forecasts do not develop in a vacuum," is a reminder that:

The final variable to have its value determined in a financial plan is often referred to as the:

How will a percentage of sales models treat cost of goods sold if sales revenues are expected to grow by 20% to $1 million? Cost of goods sold will: