Question 1

Describe the percentage of sales model and its potential pitfalls in the financial planning process.

Accepted Answer

The percentage of sales model is commonl

Question 2

Debt can be used as a plug item in financial planning.

Accepted Answer

A) True 
 B)False

Question 3

If the projected growth rate is smaller than the firm's sustainable growth rate:

Accepted Answer

A)  It should increase its projected growth rate 
B)  The firm will be required to decrease its plowback ratio 
C)  Its debt-equity ratio will decrease 
D)  The firm will be required to increase borrowing 
A)  It should increase its projected growth rate 
B)  The firm will be required to decrease its plowback ratio 
C)  Its debt-equity ratio will decrease 
D)  The firm will be required to increase borrowing

Question 4

Increases in sales are typically accompanied by:

Accepted Answer

A)  More than proportionate increases in fixed assets 
B)  Less than proportionate decreases in debt 
C)  More than proportionate decreases in dividends 
D)  Less than proportionate increases in working capital 
A)  More than proportionate increases in fixed assets 
B)  Less than proportionate decreases in debt 
C)  More than proportionate decreases in dividends 
D)  Less than proportionate increases in working capital

Question 5

Why do current or fixed assets often not vary proportionately with sales?

Accepted Answer

This question can be answered by focusin

Question 6

What are the contents and uses of a financial plan?
B. In fact, planners must be constantly on guard against the fascination of detail, because giving in to it means slighting crucial issues like investment strategy, debt policy, and the choice of a target dividend payout ratio.
The plan is the end result. The process that produces the plan is valuable in its own right. Planning forces the financial manager to consider the combined effects of all the firm's investment and financing decisions. This is important because these decisions interact and should not be made independently.

Accepted Answer

Most firms take financial planning serio

Question 7

If a firm with an asset base of $3 million recently added $150,000 to retained earnings after a dividend payment of $100,000,then its internal growth rate is:

Accepted Answer

A)  1.67% 
B)  3.33% 
C)  5.00% 
D)  8.33% 
A)  1.67% 
B)  3.33% 
C)  5.00% 
D)  8.33%

Question 8

A forecast using a percentage of sales model expects sales to increase by 5% over each of the next four years.If costs are proportional to sales at 80%,and last year's sales were $1,000,the net income in the fourth year will be:

Accepted Answer

A)  $48.62 
B)  $145.86 
C)  $227.60 
D)  $243.10 
A)  $48.62 
B)  $145.86 
C)  $227.60 
D)  $243.10

Question 9

Which of the following is not a reason for building financial plans?

Accepted Answer

A)  Considering options 
B)  Contingency planning 
C)  Choosing the optimal plan 
D)  Forcing consistency 
A)  Considering options 
B)  Contingency planning 
C)  Choosing the optimal plan 
D)  Forcing consistency

Question 10

The decision to acquire fixed assets is unrelated to the current level of excess capacity.

Accepted Answer

A) True 
 B)False

Question 11

What is the maximum dividend payout ratio consistent with not requiring external funds for a firm with an ROE of 15%,a debt-equity ratio of 50%,and an annual sales growth objective of 9%?

Accepted Answer

A)  Approximately 1% 
B)  Approximately 10% 
C)  Approximately 12% 
D)  Approximately 20% 
A)  Approximately 1% 
B)  Approximately 10% 
C)  Approximately 12% 
D)  Approximately 20%

Question 12

Firms that maintain a constant ratio of debt-equity over a variable business cycle may find that:

Accepted Answer

A)  Debt has grown too large, too fast 
B)  It is more difficult to maintain a stable dividend 
C)  Debt covenants always accommodate more debt, but often prevent debt prepayment 
D)  Equity is always less expensive to obtain than debt 
A)  Debt has grown too large, too fast 
B)  It is more difficult to maintain a stable dividend 
C)  Debt covenants always accommodate more debt, but often prevent debt prepayment 
D)  Equity is always less expensive to obtain than debt

Question 13

Dividend policy is determined by all of the following except:

Accepted Answer

A)  The debt-equity ratio 
B)  The need for funds 
C)  Forecasting 
D)  As a consequence of other planning decisions 
A)  The debt-equity ratio 
B)  The need for funds 
C)  Forecasting 
D)  As a consequence of other planning decisions

Question 14

The flexibility of financial plans is evident in the extent that:

Accepted Answer

A)  Actual profits will deviate from projected profits 
B)  The plans can be adapted when conditions change 
C)  Use of the plans can be extended 
D)  Planning output is the same regardless of economic conditions 
A)  Actual profits will deviate from projected profits 
B)  The plans can be adapted when conditions change 
C)  Use of the plans can be extended 
D)  Planning output is the same regardless of economic conditions

Describe the percentage of sales model and its potential pitfalls in the financial planning process.

Debt can be used as a plug item in financial planning.

If the projected growth rate is smaller than the firm's sustainable growth rate:

Increases in sales are typically accompanied by:

Why do current or fixed assets often not vary proportionately with sales?

If a firm with an asset base of $3 million recently added $150,000 to retained earnings after a dividend payment of $100,000,then its internal growth rate is:

A forecast using a percentage of sales model expects sales to increase by 5% over each of the next four years.If costs are proportional to sales at 80%,and last year's sales were $1,000,the net income in the fourth year will be:

Which of the following is not a reason for building financial plans?

The decision to acquire fixed assets is unrelated to the current level of excess capacity.

What is the maximum dividend payout ratio consistent with not requiring external funds for a firm with an ROE of 15%,a debt-equity ratio of 50%,and an annual sales growth objective of 9%?

Firms that maintain a constant ratio of debt-equity over a variable business cycle may find that:

Dividend policy is determined by all of the following except:

The flexibility of financial plans is evident in the extent that:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Payout Policy

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters

Exam 19: Long-Term Financial Planning

Describe the percentage of sales model and its potential pitfalls in the financial planning process.

Debt can be used as a plug item in financial planning.

If the projected growth rate is smaller than the firm's sustainable growth rate:

Increases in sales are typically accompanied by:

Why do current or fixed assets often not vary proportionately with sales?

If a firm with an asset base of $3 million recently added $150,000 to retained earnings after a dividend payment of $100,000,then its internal growth rate is:

A forecast using a percentage of sales model expects sales to increase by 5% over each of the next four years.If costs are proportional to sales at 80%,and last year's sales were $1,000,the net income in the fourth year will be:

Which of the following is not a reason for building financial plans?

The decision to acquire fixed assets is unrelated to the current level of excess capacity.

What is the maximum dividend payout ratio consistent with not requiring external funds for a firm with an ROE of 15%,a debt-equity ratio of 50%,and an annual sales growth objective of 9%?

Firms that maintain a constant ratio of debt-equity over a variable business cycle may find that:

Dividend policy is determined by all of the following except:

The flexibility of financial plans is evident in the extent that:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Payout Policy

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters