Question 1

Which of the following is likely to increase the firm's additional funds needed?

Accepted Answer

A) The firm cuts its dividend by 50 percent. 
B) The firm reduces its usage of trade credit. 
C) The firm has unused fixed assets. 
D) All of these would increase the firm's additional funds needed. 
A) The firm cuts its dividend by 50 percent. 
B) The firm reduces its usage of trade credit. 
C) The firm has unused fixed assets. 
D) All of these would increase the firm's additional funds needed. B

Question 2

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 2011 is a "stale" year?

Accepted Answer

A) $400,000 
B) $580,000 
C) $625,000 
D) $700,000 
A) $400,000 
B) $580,000 
C) $625,000 
D) $700,000 C

Question 3

Suppose that Psy Ops Industries currently has the balance sheet shown as follows,and that sales for the year just ended were $6 million.The firm also has a profit margin of 9 percent,a retention ratio of 5 percent,and expects sales of $8.5 million next year.If fixed assets have enough capacity to cover the increase in sales and all other assets and current liabilities are expected to increase with sales,how much additional funds will Psy Ops need from external sources to fund the expected growth?

Accepted Answer

A) $795,100 
B) $141,300 
C) $783,600 
D) $214,900 
A) $795,100 
B) $141,300 
C) $783,600 
D) $214,900 A

Question 4

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

Accepted Answer

A) The firm's profit margin decreases 
B) The firm's retention ratio is decreased 
C) The firm becomes less capital intensive 
D) The firm reduces its usage of trade credit 
A) The firm's profit margin decreases 
B) The firm's retention ratio is decreased 
C) The firm becomes less capital intensive 
D) The firm reduces its usage of trade credit

Question 5

First order effects are defined as which of the following?

Accepted Answer

A) The subsequent, less observable effects of the change 
B) The subsequent, more observable effects of the change 
C) Higher order effects of the change 
D) The immediately observable effects of changing one item on another 
A) The subsequent, less observable effects of the change 
B) The subsequent, more observable effects of the change 
C) Higher order effects of the change 
D) The immediately observable effects of changing one item on another

Question 6

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?

Accepted Answer

A) $1,990,000 
B) $1,830,000 
C) $2,160,000 
D) $2,080,000 
A) $1,990,000 
B) $1,830,000 
C) $2,160,000 
D) $2,080,000

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 regression to estimate a trend?

Accepted Answer

A) $2,140,000 
B) $2,225,000 
C) $2,300,000 
D) $2,500,000 
A) $2,140,000 
B) $2,225,000 
C) $2,300,000 
D) $2,500,000

Question 8

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 9

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

Accepted Answer

A) $2,450,000 
B) $2,900,000 
C) $2,350,000 
D) $2,585,000 
A) $2,450,000 
B) $2,900,000 
C) $2,350,000 
D) $2,585,000

Question 10

Which of the following are considered "chunky" or "lumpy" assets?

Accepted Answer

A) Total assets 
B) Current assets 
C) Fixed assets 
D) Additional funds needed (AFN) 
A) Total assets 
B) Current assets 
C) Fixed assets 
D) Additional funds needed (AFN)

Question 11

Which of the following defines the term deseasonalize?

Accepted Answer

A) To use pro forma statements to determine future years' forecasts 
B) To remove the effects of seasonality from historic data 
C) To remove fixed asset growth that does not tie into sales growth 
D) To fix asset growth to smooth out the seasonality of sales growth 
A) To use pro forma statements to determine future years' forecasts 
B) To remove the effects of seasonality from historic data 
C) To remove fixed asset growth that does not tie into sales growth 
D) To fix asset growth to smooth out the seasonality of sales growth

Question 12

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 was determined that 2008 is a "stale" year?

Accepted Answer

A) $1,000,000 
B) $1,740,000 
C) $1,925,000 
D) $2,200,000 
A) $1,000,000 
B) $1,740,000 
C) $1,925,000 
D) $2,200,000

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 these statements 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 these statements are correct.

Question 14

Is forecasting more important for small firms or large firms? Why?

Accepted Answer

Forecasting and the process of financial

Question 15

Which statement is most correct regarding how pro forma financial statements can be used to estimate additional funds needed?

Accepted Answer

A) Pro forma statements can be used to iteratively refine the amount of additional funds needed. 
B) Pro forma statements are less precise than other methods for determining additional funds needed. 
C) Pro forma statements take into account changes in cost of goods sold that other methods of determining additional funds needed ignore. 
D) Pro forma statements take into account dividend payments that other methods of determining additional funds needed ignore. 
A) Pro forma statements can be used to iteratively refine the amount of additional funds needed. 
B) Pro forma statements are less precise than other methods for determining additional funds needed. 
C) Pro forma statements take into account changes in cost of goods sold that other methods of determining additional funds needed ignore. 
D) Pro forma statements take into account dividend payments that other methods of determining additional funds needed ignore.

Question 16

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 23 percent,a retention ratio of 40 percent,and expects sales of $20 million next year.If all assets and current liabilities are expected to grow with sales,what is the projected increase in retained earnings?

Accepted Answer

A) $1,050,000 
B) $1,240,000 
C) $1,366,957.14 
D) $1,840,000 
A) $1,050,000 
B) $1,240,000 
C) $1,366,957.14 
D) $1,840,000

Question 17

Suppose that the 2013 actual and 2014 projected financial statements for CMT Corp.are initially as shown in the following tables.In these tables,sales are projected to rise 35 percent in the coming year,and the components of the income statement and balance sheet that are expected to increase at the same 35 percent rate as sales need to be calculated and are indicated with a blank space (___).Assuming that CMT Corp.wants to cover the AFN with 30 percent equity,35 percent long-term debt,and the remainder from notes payable,what amount of additional funds will they need to raise if debt carries a 9 percent interest rate?

Accepted Answer

$32,400 equity; $37,

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 regression to estimate a trend?

Accepted Answer

A) $850,000 
B) $860,000 
C) $861,500 
D) $874,000 
A) $850,000 
B) $860,000 
C) $861,500 
D) $874,000

Question 20

Suppose that the 2013 actual and 2014 projected financial statements for Cramner Corp.are initially as shown in the following tables.In these tables,sales are projected to rise 35 percent in the coming year,and the components of the income statement and balance sheet that are expected to increase at the same 35 percent rate as sales are indicated with an italics font.Assuming that Cramner Corp.wants to cover the AFN with 45 percent equity,25 percent long-term debt,and the remainder from notes payable,what amount of additional funds will they need to raise if debt carries an 8 percent interest rate?

Accepted Answer

A) $660,600 equity; $367,000 long-term debt; $440,400 notes payable 
B) $660,600 equity; $440,400 notes payable; $367,000 long-term debt 
C) $1,468,000 equity; $0 long-term debt; $0 notes payable 
D) None of the answers is correct 
A) $660,600 equity; $367,000 long-term debt; $440,400 notes payable 
B) $660,600 equity; $440,400 notes payable; $367,000 long-term debt 
C) $1,468,000 equity; $0 long-term debt; $0 notes payable 
D) None of the answers is correct

Which of the following is likely to increase the firm's additional funds needed?

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 2011 is a "stale" year?

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

First order effects are defined as 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 average approach?

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

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

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

Which of the following are considered "chunky" or "lumpy" assets?

Which of the following defines the term deseasonalize?

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 was determined that 2008 is a "stale" year?

Which of the following statements is incorrect?

Is forecasting more important for small firms or large firms? Why?

Which statement is most correct regarding how pro forma financial statements can be used to estimate additional funds needed?

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 regression to estimate a trend?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

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 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 is likely to increase the firm's additional funds needed?

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 2011 is a "stale" year?

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

First order effects are defined as 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 average approach?

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

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

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

Which of the following are considered "chunky" or "lumpy" assets?

Which of the following defines the term deseasonalize?

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 was determined that 2008 is a "stale" year?

Which of the following statements is incorrect?

Is forecasting more important for small firms or large firms? Why?

Which statement is most correct regarding how pro forma financial statements can be used to estimate additional funds needed?

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 regression to estimate a trend?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Time Value of Money

Valuing Bonds

Valuing Stockspart

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 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