Exam 14: Short-Term Financial Planning

At a minimum,the sales forecast for the coming year would reflect

The percent of sales method provides a general estimate,but the more detailed cash budget will ultimately be used to estimate financing needs.

Use the "percent of sales method" of preparing pro forma financial statements to determine the projection for next year's accounts payable.Make the following assumptions: current year's sales are $27,800,000; current year's cost of goods sold is $17,528,000; sales are expected to rise by 30%.The firm's investment in accounts payable in the current year is $2,218,500.What is the projection for next year's accounts payable?

Discretionary financing needed can be positive or zero,but not negative.

A budget is a forecast of future events.

Notes payable and bonds payable are spontaneous liabilities.

All of the following are examples of sources of discretionary financing EXCEPT

Discretionary financing needs will be lower if ________.Assume "all else equal."

Which of the following will most likely result in an increase in discretionary funding needed?

Which of the following is a spontaneous source of financing?

What differentiates "discretionary financing needs" from "external financing needs"?

The cash budget consists of all the following factors EXCEPT

Matterhorn,Inc.had the following sales for the past six months.Matterhorn collects its credit sales 30% in the month of sale,60% one month after the sale,and 10% two months after the sale. What are Matterhorn's total cash receipts for the month of March?

Gerentology Associates,a highly profitable company,is considering two growth strategies,one that will achieve sales growth of 20% in one year,and the other that will achieve 20% growth in sales,but over a 4-year time frame.Assuming Gerentology Associates uses the percent of sales method,which of the following statements is true?

Cash budgets are completed only on an annual basis because shorter periods of time are too variable and uncertain for meaningful results.

Discretionary financing needed must be obtained through additional borrowing because additional equity measured by the increase in retained earnings has already been deducted.

Ribbon Industries reported sales of $3 million and net income of $400,000 for 2010.The retained earnings balance at the end of 2012 is $7 million.Ribbon Industries has a dividend payout ratio of 30%.If sales are expected to increase by 25% next year,what will be the projected balance in retained earnings using the percent of sales method?

Which of the following items does NOT belong in a cash budget?

When forecasting fixed asset requirements,the projected fixed asset balance will

The annual cash budget not only shows the amount of financing needed for the year,but also when the funds will be needed.