Question 1

Financial plans covering a short planning horizon rarely extend beyond:

Accepted Answer

A) one year 
B) three years 
C) five years 
D) ten years 
A) one year 
B) three years 
C) five years 
D) ten years

Question 2

A potential downfall of using dividends as the plug item is that:

Accepted Answer

A) It may give shareholders mixed signals 
B) Dividends are constant within a planning horizon 
C) The firm may have to borrow cash to pay dividends 
D) Shareholders may receive an excessive return 
A) It may give shareholders mixed signals 
B) Dividends are constant within a planning horizon 
C) The firm may have to borrow cash to pay dividends 
D) Shareholders may receive an excessive return

Question 3

85.Calculate the plowback ratio given the following data:

Accepted Answer

A) 46.25% 
B) 36.25% 
C) 26.25% 
D) 16.25% 
E) 6.25%
  
A) 46.25% 
B) 36.25% 
C) 26.25% 
D) 16.25% 
E) 6.25%

Question 4

Describe the role of a balancing item or "plug" in financial planning.

Accepted Answer

In every financial planning situation, p

Question 5

Calculate the plowback ratio given the following information:

Accepted Answer

A) .333 
B) .667 
C) .750 
D) .855 
A) .333 
B) .667 
C) .750 
D) .855

Question 6

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 7

The following data has been collected for Xancho Corporation:

Accepted Answer

@#IMG-DLM& Given this information, calculate the f

Question 8

A firm that admits to having "financial slack" has:

Accepted Answer

A) Uncommitted liquid assets or unused borrowing power 
B) A low ROE but high leverage 
C) More than sufficient cash to pay dividends 
D) Grown at a rate less than its sustainable growth 
A) Uncommitted liquid assets or unused borrowing power 
B) A low ROE but high leverage 
C) More than sufficient cash to pay dividends 
D) Grown at a rate less than its sustainable growth

Question 9

List and briefly describe the components of a financial planning model.

Accepted Answer

The first of three components of a finan

Question 10

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

Accepted Answer

A) Forecasters are known not to work well alone 
B) Planners will offer ten plans when asked for one 
C) Competitors also make plans and react to ours 
D) Forecasts should be developed at headquarters 
A) Forecasters are known not to work well alone 
B) Planners will offer ten plans when asked for one 
C) Competitors also make plans and react to ours 
D) Forecasts should be developed at headquarters

Question 11

In long-range or strategic planning, the planning horizon is usually five years or more.Explain.
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.

Accepted Answer

This kind of planning deals with aggrega

Question 12

Which of the following statements is correct for a firm that has a sustainable growth rate that exceeds its projected growth rate in assets?

Accepted Answer

A) The projected growth in assets will be restricted 
B) The internal growth rate will provide the remaining assets 
C) The firm's ROE must increase 
D) The debt-equity ratio will increase unless equity is issued 
A) The projected growth in assets will be restricted 
B) The internal growth rate will provide the remaining assets 
C) The firm's ROE must increase 
D) The debt-equity ratio will increase unless equity is issued

Question 13

Adaptability is not a desirable feature in financial plans.

Accepted Answer

A) True 
 B)False

Question 14

What is the difference between the internal and sustainable growth rates, both in definition and in calculation? In what case are the rates equal?

Accepted Answer

The internal growth rate represents the

Question 15

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 16

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?

Accepted Answer

A) 0.42 
B) 0.56 
C) 0.63 
D) 1.00 
A) 0.42 
B) 0.56 
C) 0.63 
D) 1.00

Question 17

84.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.

Accepted Answer

A) $150,000 
B) $200,000 
C) $250,000 
D) $300,000 
E) $350,000 New Investment - addition to retained earnings 
A) $150,000 
B) $200,000 
C) $250,000 
D) $300,000 
E) $350,000 New Investment - addition to retained earnings

Question 18

A major difference between financial planning and forecasting is that financial planning:

Accepted Answer

A) Is forward-looking 
B) Relies on the viewpoints of management 
C) Determines the rate of profitability 
D) Is equally concerned with less-likely outcomes 
A) Is forward-looking 
B) Relies on the viewpoints of management 
C) Determines the rate of profitability 
D) Is equally concerned with less-likely outcomes

Question 19

When a firm is said to have no spare capacity, it:

Accepted Answer

A) Has no need for new employees 
B) Currently has no inventory available for sale 
C) Must issue new equity to grow 
D) Must increase fixed assets to increase sales 
A) Has no need for new employees 
B) Currently has no inventory available for sale 
C) Must issue new equity to grow 
D) Must increase fixed assets to increase sales

Question 20

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

Accepted Answer

A) Net income 
B) Balancing item 
C) Retained earning plowback 
D) Growth forecast 
A) Net income 
B) Balancing item 
C) Retained earning plowback 
D) Growth forecast

Exam 19: Short-Term Financial Planning

Financial plans covering a short planning horizon rarely extend beyond:

A potential downfall of using dividends as the plug item is that:

85.Calculate the plowback ratio given the following data:

Describe the role of a balancing item or "plug" in financial planning.

Calculate the plowback ratio given the following information:

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

The following data has been collected for Xancho Corporation:

A firm that admits to having "financial slack" has:

List and briefly describe the components of a financial planning model.

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

Which of the following statements is correct for a firm that has a sustainable growth rate that exceeds its projected growth rate in assets?

Adaptability is not a desirable feature in financial plans.

What is the difference between the internal and sustainable growth rates, both in definition and in calculation? In what case are the rates equal?

Dividend policy is determined by all of the following except:

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?

84.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.

A major difference between financial planning and forecasting is that financial planning:

When a firm is said to have no spare capacity, it:

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

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 Policy

Payout Policy

Long-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

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