Exam 15: Financial Planning and Forecasting

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?

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

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

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?

Which of the following can be computed as: necessary increase in assets minus spontaneous increase in liabilities minus projected increase in retained earnings?

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,how much will spontaneous liabilities increase with the increase in sales?

Goldilochs Inc.reported sales of $8 million and net income of $1.5 million.The firm has $12 million in total assets and $500,000 in current liabilities.The firm currently pays out 25 percent of its net income to shareholders.Assume that all assets and current liabilities are expected to grow with sales.If Goldilochs does not want to rely on any external sources of funds,what is the most sales can grow (in percent)?

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"?

Forecasted sales drives all of the following EXCEPT:

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?

What are two issues that are not addressed regarding fixed assets if one simply uses the AFN formula in its simplest form? How would they impact the AFN calculation?

Which of the following defines MAPE?

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?

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?

The simplest approach to estimating a future period's sales is to assume that they will be equal to those of the latest observed period.In statistics,this is often simply referred to as which of the following?

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

Suppose that the 2013 actual and 2014 projected financial statements for Carrier Corp.are initially as shown in the following tables.In these tables,sales are projected to rise 40 percent in the coming year,and the components of the income statement and balance sheet that are expected to increase at the same 40 percent rate as sales are indicated with an italics font.Assuming that Carrier Corp.wants to cover the AFN with 50 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 a 10 percent interest rate?

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?

What would be the appropriate way to forecast sales for a firm that has stable year-to-year sales,but seasonally fluctuating month-to-month sales?