Exam 4: Long-Term Financial Planning and Growth

The Corner Store has $219,000 of sales and $193,000 of total assets.The firm is operating at 87 percent of capacity.What is the capital intensity ratio at full capacity?

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(Multiple Choice)

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Question 1

Correct Answer:

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Nelson's Landscaping Services just completed a pro forma statement using the percentage of sales approach.The pro forma has a projected external financing need of -$5,500.What are the firm's options in this case?

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Question 2

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With a negative external financing need,the firm has a surplus of funds that it can use to reduce current liabilities,reduce long-term debt,buy back common stock,or increase dividends.If acceptable opportunities exist,the firm might also use the extra funds to purchase fixed assets thereby increasing its maximum capacity level,should that need be anticipated.

The internal growth rate of a firm is best described as the:

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Question 3

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Sal's Pizza has a dividend payout ratio of 10 percent.The firm does not want to issue additional equity shares but does want to maintain its current debt-equity ratio and its current dividend policy.The firm is profitable.Which one of the following defines the maximum rate at which this firm can grow?

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Question 4

Based on the following information,what is the sustainable growth rate of Hendrix Guitars,Inc.?

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Question 5

Atlas Industries combines the smaller investment proposals from each operational unit into a single project for planning purposes.This process is referred to as which one of the following?

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Question 6

Why do financial managers need to understand the implications of both the internal and the sustainable rates of growth?

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Question 7

Financial plans generally tend to ignore which one of the following?

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Question 8

Which one of the following is correct in relation to pro forma statements?

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Question 9

Which one of the following terms is applied to the financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income statement account values?

(Multiple Choice)

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Question 10

The most recent financial statements for Benatar Co.are shown here: Assets and costs are proportional to sales.Debt and equity are not.The company maintains a constant 40 percent dividend payout ratio.No external equity financing is possible.What is the internal growth rate?

(Multiple Choice)

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Question 11

Sales can often increase without increasing which one of the following?

(Multiple Choice)

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Question 12

The most recent financial statements for Last in Line,Inc.are shown here: Assets and costs are proportional to sales.Debt and equity are not.A dividend of $992 was paid,and the company wishes to maintain a constant payout ratio.Next year's sales are projected to be $21,830.What is the amount of the external financing need?

(Multiple Choice)

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Question 13

What is the sustainable growth rate assuming the following ratios are constant?

(Multiple Choice)

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Question 14

A)What are the assumptions that underlie the internal growth rate and B)what are the implications of this rate?

(Essay)

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Question 15

The Soccer Shoppe has a 9 percent return on assets and a 25 percent payout ratio.What is its internal growth rate?

(Multiple Choice)

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Question 16

A firm's external financing need is financed by which of the following?

(Multiple Choice)

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Question 17

The plowback ratio is:

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Question 18

The sustainable growth rate:

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Question 19

Identify the four primary determinants of a firm's growth and explain how each factor could either add to or limit the growth potential of a firm.

(Essay)

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Question 20

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Exam 4: Long-Term Financial Planning and Growth

The Corner Store has $219,000 of sales and $193,000 of total assets.The firm is operating at 87 percent of capacity.What is the capital intensity ratio at full capacity?

Nelson's Landscaping Services just completed a pro forma statement using the percentage of sales approach.The pro forma has a projected external financing need of -$5,500.What are the firm's options in this case?

The internal growth rate of a firm is best described as the:

Based on the following information,what is the sustainable growth rate of Hendrix Guitars,Inc.?

Atlas Industries combines the smaller investment proposals from each operational unit into a single project for planning purposes.This process is referred to as which one of the following?

Why do financial managers need to understand the implications of both the internal and the sustainable rates of growth?

Financial plans generally tend to ignore which one of the following?

Which one of the following is correct in relation to pro forma statements?

Which one of the following terms is applied to the financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income statement account values?

The most recent financial statements for Benatar Co.are shown here: Assets and costs are proportional to sales.Debt and equity are not.The company maintains a constant 40 percent dividend payout ratio.No external equity financing is possible.What is the internal growth rate?

Sales can often increase without increasing which one of the following?

What is the sustainable growth rate assuming the following ratios are constant?

A)What are the assumptions that underlie the internal growth rate and B)what are the implications of this rate?

The Soccer Shoppe has a 9 percent return on assets and a 25 percent payout ratio.What is its internal growth rate?

A firm's external financing need is financed by which of the following?

The plowback ratio is:

The sustainable growth rate:

Identify the four primary determinants of a firm's growth and explain how each factor could either add to or limit the growth potential of a firm.

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Introduction to Valuation: The Time Value of Money

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters