Exam 10: Forecasting Financial Statements

Projecting sales price changes depends on factors specific to the firm and its industry that might affect demand and price elasticity. Which of the following companies would most likely not be able to increase prices in the near future?

Baseball Card Land, Inc. sells baseball cards and other memorabilia. The company tries to maintain a cash balance equivalent to approximately 30 days of sales. Sales in 2006 amounted to $352,412 and the company expects growth in 2007 of 33% and in 2008 of 40%. Given the information provided about Baseball Card Land what is the company's 2008 projected annual sales?

Financial statement forecasts rely on additivity within financial statements and articulation across financial statements. Given this information forecasts of future growth in inventory will most likely affect growth in

Baseball Card Land, Inc. sells baseball cards and other memorabilia. The company tries to maintain a cash balance equivalent to approximately 30 days of sales. Sales in 2006 amounted to $352,412 and the company expects growth in 2007 of 33% and in 2008 of 40%. Given the information provided about Baseball Card Land what is the company's 2007 projected year-end cash balance?

Projecting sales price changes depends on factors specific to the firm and its industry that might affect demand and price elasticity. Which of the following types of companies would most likely be able to increase prices?

The following balance sheet and income statement pertain to Graham Corp., using the following assumptions complete a forecasted 2008 income statement:

Toys, Inc. manufactures and markets toys. Selected income statement data from 2005 and 2004 appear below: Required:

Firms which have differentiated ___________________________________ for its products may have a greater potential to increase prices.

For some types of assets, such as plant, property and equipment, asset growth typically ____________________ future sales growth.

Realistic expectations are ____________________ and ____________________.

Clothes, Inc. sells women's clothes. Provided below is selected financial statement information: Required:

As an analyst it is important when projecting sales to make estimates about future changes in sales volume. Compare how you might make estimates about future sales value for a company in a mature industry and one in a rapidly growing industry.

The authors set forth a six step forecasting game plan for preparing pro forma financial statements. Discuss the six steps necessary to prepare the three principal financial statements.

One problem caused by using turnover ratios to calculate asset balances is that it can lead to volatility in projected ending balances. What might an analyst do to reduce the "sawtooth" pattern caused by using turnover ratios?

To develop forecasts of individual assets, the analyst must first link historical growth rates for individual assets to historical growth rates in sales or other ___________________________________.

Financial statement forecasts should rely on _________________________ across financial statements.

You are provided the following information about Davis Corp.s Accounts Receivable and Sales: Required:

Just Camshafts sells auto parts. Provided below is selected financial information from the company's 2007 annual report: Just Camshafts forecasts that sales will grow by 25% in 2008 and that its cost of goods sold to sales ratio will be the same in 2008 as it was in 2007. If these assumptions prove correct and Just Camshafts inventory turnover ratio for 2008 is 4.5 what will be the level of inventory at the end of 2008?

To develop forecasts of individual assets the analyst must first link historical growth rates for individual assets to historical growth rates in ____________________ and other activity-based drivers.

A company that has a cost structure in which its costs grow at a lesser rate than its sale enjoys ___________________________________.