Question 1

Which of the following will increase a firm's need for additional funds?

Accepted Answer

A) An increase in the firm's average collection period 
B) An increase in the retention ratio 
C) A decrease in sales growth 
D) An increase in accrued wages 
A) An increase in the firm's average collection period 
B) An increase in the retention ratio 
C) A decrease in sales growth 
D) An increase in accrued wages A

Question 2

Goldilochs Inc. reported sales of $8 million and net income of $2 million. The firm has a total asset turnover of 3.2. The firm's chief financial officer is projecting a $5 million increase in sales and that spontaneous liabilities will increase by $350,000 automatically. The firm currently pays out 80 percent of its net income to shareholders. Assuming that all assets and current liabilities are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

Accepted Answer

A) $501,900 
B) $562,500 
C) $601,800 
D) $446,600 
A) $501,900 
B) $562,500 
C) $601,800 
D) $446,600 B

Question 3

Silly Putty Inc. has had sales of $10 million, $15 million, and $8 million for each of the last three years. What would be the MAPE if the actual sales were $12 million using the average approach?

Accepted Answer

A) 11.00 percent 
B) 20.00 percent 
C) 26.67 percent 
D) 33.33 percent 
A) 11.00 percent 
B) 20.00 percent 
C) 26.67 percent 
D) 33.33 percent C

Question 4

Goldilochs Inc. reported sales of $8 million and net income of $1.5 million. The firm has $10.5 million in total assets. The firm's chief financial officer is projecting a 20 percent increase in sales. If the firm's sales do increase by 20 percent, it is expected that spontaneous liabilities will increase by $500,000. The firm currently pays out 30 percent of its net income to shareholders. Assuming that all assets are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

Accepted Answer

A) $340,000 
B) $299,000 
C) $321,000 
D) $360,000 
A) $340,000 
B) $299,000 
C) $321,000 
D) $360,000

Question 5

All of the following will tend to increase spontaneously with sales EXCEPT:

Accepted Answer

A) accrued wages. 
B) notes payable. 
C) accounts payable. 
D) All of the options will tend to increase spontaneously with sales. 
A) accrued wages. 
B) notes payable. 
C) accounts payable. 
D) All of the options will tend to increase spontaneously with sales.

Question 6

Which of the following defines MAPE?

Accepted Answer

A) Median absolute percentage error, a measure of a financial statement's accuracy 
B) Median absolute percentage error, a measure of a forecast's accuracy 
C) Mean absolute percentage error, a measurement of a forecast's accuracy 
D) Mean absolute percentage error, a measure of a financial statement's accuracy 
A) Median absolute percentage error, a measure of a financial statement's accuracy 
B) Median absolute percentage error, a measure of a forecast's accuracy 
C) Mean absolute percentage error, a measurement of a forecast's accuracy 
D) Mean absolute percentage error, a measure of a financial statement's accuracy

Question 7

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach if it is determined that none of the years are "stale"?

Accepted Answer

A) $1,600,000 
B) $1,660,000 
C) $1,700,000 
D) $1,800,000 
A) $1,600,000 
B) $1,660,000 
C) $1,700,000 
D) $1,800,000

Question 8

Suppose that Wind Em Corp. currently has the balance sheet shown as follows, and that sales for the year just ended were $15 million. The firm also has a profit margin of 20 percent, a retention ratio of 30 percent, and expects sales of $22 million next year. If all assets and current liabilities are expected to grow with sales, how much will spontaneous liabilities increase with the increase in sales?

Accepted Answer

A) $1,950,000 
B) $2,240,000 
C) $2,366,000 
D) $1,167,000 
A) $1,950,000 
B) $2,240,000 
C) $2,366,000 
D) $1,167,000

Question 9

Which of the following defines iterative calculation?

Accepted Answer

A) The practice of overriding a spreadsheet program or calculator in order to be able to compute an answer so as to take into account circular dependency in a system of equations. 
B) The practice of ensuring there are no circular dependencies in a system of equations. 
C) The practice of letting a spreadsheet program or calculator repeatedly compute an answer so as to take into account circular dependency in a system of equations. 
D) The practice of using the AFN formula to calculate an answer in order to avoid circular dependencies in a system of equations. 
A) The practice of overriding a spreadsheet program or calculator in order to be able to compute an answer so as to take into account circular dependency in a system of equations. 
B) The practice of ensuring there are no circular dependencies in a system of equations. 
C) The practice of letting a spreadsheet program or calculator repeatedly compute an answer so as to take into account circular dependency in a system of equations. 
D) The practice of using the AFN formula to calculate an answer in order to avoid circular dependencies in a system of equations.

Question 10

Financial planning involves estimating projected cash flows, which is useful for all the following EXCEPT:

Accepted Answer

A) setting internal goals. 
B) providing information to shareholders and other external stakeholders concerning the firm's future expectations. 
C) estimating the firm's future needs for internal and external financing. 
D) auditors to determine if the company's annual report is true and correct. 
A) setting internal goals. 
B) providing information to shareholders and other external stakeholders concerning the firm's future expectations. 
C) estimating the firm's future needs for internal and external financing. 
D) auditors to determine if the company's annual report is true and correct.

Question 11

Which of the following is used to remove the effects of seasonality from historic data?

Accepted Answer

A) Average approach 
B) Base case approach 
C) Deseasonalized approach 
D) Pro forma approach 
A) Average approach 
B) Base case approach 
C) Deseasonalized approach 
D) Pro forma approach

Question 12

Abracadabra Inc. has total assets of $106,000 and a debt ratio of 40 percent. If last year's sales were $145,000 and sales are expected to grow 10 percent in the future, what is Abracadabra's capital intensity ratio?

Accepted Answer

A) 0.73 
B) 1.37 
C) 0.44 
D) 2.27 
A) 0.73 
B) 1.37 
C) 0.44 
D) 2.27

Question 13

Which of the following statements is incorrect?

Accepted Answer

A) For most businesses, increases in spontaneous liabilities will be enough to fund the necessary increases in assets. 
B) The capital intensity ratio indicates the amount of assets the firm needs to invest to generate each dollar in sales. 
C) The vast majority of fixed assets are "chunky" or "lumpy" since they have to be bought in non-divisible quantities. 
D) All of the options are correct. 
A) For most businesses, increases in spontaneous liabilities will be enough to fund the necessary increases in assets. 
B) The capital intensity ratio indicates the amount of assets the firm needs to invest to generate each dollar in sales. 
C) The vast majority of fixed assets are "chunky" or "lumpy" since they have to be bought in non-divisible quantities. 
D) All of the options are correct.

Question 14

Silly Putty Inc. has had sales of $12 million, $17 million, and $16 million for each of the last three years. What would be the MAPE if the actual sales were $15 millionusing the naïve approach?

Accepted Answer

A) 6.71 percent 
B) 5.73 percent 
C) (-8.14 percent) 
D) (-6.67 percent) 
A) 6.71 percent 
B) 5.73 percent 
C) (-8.14 percent) 
D) (-6.67 percent)

Question 15

Which of the following is the practice of one firm selling to another on credit terms?

Accepted Answer

A) Accounts payable 
B) Accounts receivable 
C) Barter transactions 
D) Trade credit 
A) Accounts payable 
B) Accounts receivable 
C) Barter transactions 
D) Trade credit

Question 16

Which of the following will increase the additional funds needed from external sources?

Accepted Answer

A) The firm's profit margin increases 
B) The firm's sales forecast is decreased 
C) The firm reduces its usage of trade credit 
D) The firm's retention ratio is increased 
A) The firm's profit margin increases 
B) The firm's sales forecast is decreased 
C) The firm reduces its usage of trade credit 
D) The firm's retention ratio is increased

Question 17

Goldilochs Inc. reported sales of $8 million and net income of $2 million. The firm has a total asset turnover of 1.2. The firm's chief financial officer is projecting a $6 million increase in sales and that spontaneous liabilities will increase by $1 million automatically. The firm currently pays out 50 percent of its net income to shareholders. Assuming that all assets and current liabilities are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

Accepted Answer

A) $1,250,000 
B) $1,750,000 
C) $2,500,000 
D) $2,250,000 
A) $1,250,000 
B) $1,750,000 
C) $2,500,000 
D) $2,250,000

Question 18

If a firm has excess capacity when calculating AFN (Additional Funds Needed), A* will most likely equal which of the following?

Accepted Answer

A) Total assets 
B) Current assets 
C) Fixed assets 
D) Lumpy assets 
A) Total assets 
B) Current assets 
C) Fixed assets 
D) Lumpy assets

Question 19

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?

Accepted Answer

A) $2,100,000 
B) $2,200,000 
C) $1,780,000 
D) $1,730,000 
A) $2,100,000 
B) $2,200,000 
C) $1,780,000 
D) $1,730,000

Question 20

Goldilochs Inc. reported sales of $5 million and net income of $1 million. The firm has $10.5 million in total assets. The firm's chief financial officer is projecting a 20 percent increase in sales. If the firm's sales do increase by 20 percent, it is expected that spontaneous liabilities will increase by $1 million. The firm currently pays out 30 percent of its net income to shareholders. Assuming that all assets are expected to grow with sales, how much in additional funds will Goldilochs need from external sources to fund the expected growth?

Accepted Answer

A) $245,000 
B) $197,000 
C) $221,000 
D) $260,000 
A) $245,000 
B) $197,000 
C) $221,000 
D) $260,000

Which of the following will increase a firm's need for additional funds?

Silly Putty Inc. has had sales of $10 million, $15 million, and $8 million for each of the last three years. What would be the MAPE if the actual sales were $12 million using the average approach?

All of the following will tend to increase spontaneously with sales EXCEPT:

Which of the following defines MAPE?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach if it is determined that none of the years are "stale"?

Which of the following defines iterative calculation?

Financial planning involves estimating projected cash flows, which is useful for all the following EXCEPT:

Which of the following is used to remove the effects of seasonality from historic data?

Abracadabra Inc. has total assets of $106,000 and a debt ratio of 40 percent. If last year's sales were $145,000 and sales are expected to grow 10 percent in the future, what is Abracadabra's capital intensity ratio?

Which of the following statements is incorrect?

Silly Putty Inc. has had sales of $12 million, $17 million, and $16 million for each of the last three years. What would be the MAPE if the actual sales were $15 millionusing the naïve approach?

Which of the following is the practice of one firm selling to another on credit terms?

Which of the following will increase the additional funds needed from external sources?

If a firm has excess capacity when calculating AFN (Additional Funds Needed), A* will most likely equal which of the following?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 15: Financial Planning and Forecasting

Which of the following will increase a firm's need for additional funds?

Silly Putty Inc. has had sales of $10 million, $15 million, and $8 million for each of the last three years. What would be the MAPE if the actual sales were $12 million using the average approach?

All of the following will tend to increase spontaneously with sales EXCEPT:

Which of the following defines MAPE?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the average approach if it is determined that none of the years are "stale"?

Which of the following defines iterative calculation?

Financial planning involves estimating projected cash flows, which is useful for all the following EXCEPT:

Which of the following is used to remove the effects of seasonality from historic data?

Abracadabra Inc. has total assets of $106,000 and a debt ratio of 40 percent. If last year's sales were $145,000 and sales are expected to grow 10 percent in the future, what is Abracadabra's capital intensity ratio?

Which of the following statements is incorrect?

Silly Putty Inc. has had sales of $12 million, $17 million, and $16 million for each of the last three years. What would be the MAPE if the actual sales were $15 millionusing the naïve approach?

Which of the following is the practice of one firm selling to another on credit terms?

Which of the following will increase the additional funds needed from external sources?

If a firm has excess capacity when calculating AFN (Additional Funds Needed), A* will most likely equal which of the following?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 1: Analyzing Single Cash Flows

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters