Question 1

Card Sharks,Inc. Card Sharks,Inc.sells baseball cards and other memorabilia.The company tries to maintain a cash balance equivalent to approximately 30 days of sales.Sales in 2011 amounted to $352,412 and the company expects growth in 2012 of 33% and in 2013 of 40%.
Given the information provided about Card Sharks,what is the company's 2013 projected cash balance?

Accepted Answer

A)   $53,934
B)   $49,524
C)   $21,873
D)   $38,524 A

Question 2

As a firm progresses through the growth life-cycle stage,what type of flexible account will it be more likely to use to balance the balance sheet?

Accepted Answer

A)   issued debt.
B)   paying down of debt.
C)   dividends
D)   stock buy-backs. A

Question 3

The analyst can capture projected levels of operating activity by using ______________________________ to develop forecasts for individual assets.

Accepted Answer

turnover rates

Question 4

Office Mart,Inc.sells numerous office supply products through a national distribution center.The company has focused on maintaining a cash balance equivalent to approximately 14 days of sales.Sales in 2010 amounted to $125,980,673 and the company expects growth in 2011 of 11% and in 2012 of 15%.Given this information determine Office Mart,Inc.'s projected year-end cash balance for 2011 and 2012.

Accepted Answer

The answer of Office Mart,Inc.sells numerous office supply products through...

Question 5

When projecting operating expenses it is important to determine the mix of fixed and variable costs,one clue suggesting the presence of fixed costs is

Accepted Answer

A)   the percentage change in cost of goods sold in prior years is significantly greater than the percentage change in sales.
B)   the percentage change in cost of goods sold in prior years is significantly less than the percentage change in sales.
C)   low capital intensity in the production process.
D)   the percentage change in sales in prior years is significantly greater than the percentage change in receivables.

Question 6

Repair Specialists is a leading retailer of home improvement products.It operates large warehouse-style stores.Despite declining sales and difficult economic conditions in 2009 and 2010,Repair Specialists continued to invest in new stores.The following table provides summary data for Repair Specialists.
  Required
a.Use the preceding data for Repair Specialists to compute average revenues per store,
capital spending per new store,and ending inventory per store in 2010.
b.Assume that Repair Specialists will add 100 new stores by the end of Year 1.Use the data from 2010 to project Year 1 sales revenues,capital spending,and ending inventory.Assume that each new store will be open for business for an average of one-half year in Year 1.For simplicity,assume that in Year 1,Repair Specialists' sales
revenues will grow,but only because it will open new stores.

Accepted Answer

The answer of Repair Specialists is a leading retailer of...

Question 7

If a firm competes in a capital-intensive industry with excess capacity,all of the following are true except:

Accepted Answer

A)   price increases will be less likely.
B)   price increases will be more likely.
C)   companies in competitive industries face high exit barriers.
D)   companies in competitive industries may experience future price decreases.

Question 8

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

Accepted Answer

The answer of Firms which have differentiated ___________________________________ for its...

Question 9

All of the following are true regarding the key principles of forecasting except:

Accepted Answer

A)   Financial statement forecasts need not be comprehensive.
B)   Forecasts should not manifest wishful thinking.
C)   Financial statement forecasts must be internally consistent.
D)   Financial statement forecasts must rely on assumptions that have external validity.

Question 10

Financial ratio,percentage,and trend comparisons can be distorted by all of the following except:

Accepted Answer

A)   aggressive revenue recognition practices.
B)   the timing of asset purchases.
C)   accounting for similar economic fundamentals in similar fashion.
D)   the presence of nonrecurring items among the firms being analyzed.

Question 11

Realistic expectations are ____________________ and ____________________.

Accepted Answer

The answer of Realistic expectations are ____________________ and ____________________....

Question 12

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?

Accepted Answer

A)   A firm in a capital intensive industry that is expected to operate near capacity for the near future.
B)   A firm in a capital intensive industry in which excess capacity exists.
C)   A firm operating in an industry that is expected to experience technological improvements in its production process.
D)   A firm operating in an industry that is transitioning from the high growth to the maturity phase of its life cycle.

Question 13

Saunders Corporation manufactures consumer electronics products.Selected income statement data for 2009 and 2010 follow (amounts in millions of dollars):
  Required
a.The analyst can sometimes estimate the variable cost as a percentage of sales for a particular cost (for example,cost of goods sold)by dividing the amount of the change in the cost item between two years by the amount of the change in sales for those two years.The analyst can then multiply total sales by the variable-cost percentage to determine the total variable cost.Subtracting the variable cost from the total cost yields the fixed cost component for that particular cost item.Follow this procedure to determine the cost structure (fixed cost plus variable cost as a percentage of sales)for cost of goods sold for Saunders.
b.Repeat requirement a.for selling and administrative expenses.
c.Saunders Corporation discloses that it expects sales to grow at the following percentages
in future years: Year 1,12 percent; Year 2,10 percent; Year 3,8 percent; Year 4,6 percent.Project sales,cost of goods sold,selling and administrative expenses,and operating income before income taxes for Saunders for Year 1 to Year 4 using the cost structure amounts derived in requirements a.and b.
d.Compute the ratio of operating income before income taxes to sales for Year 1 through Year 4.
e.Interpret the changes in the ratio computed in requirement d.in light of the expected changes in sales.

Accepted Answer

The answer of Saunders Corporation manufactures consumer electronics products.Selected income...

Question 14

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

Accepted Answer

A)   accounts receivables.
B)   accounts payable.
C)   depreciation.
D)   salary payable.

Question 15

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

Accepted Answer

The answer of The authors set forth a seven-step forecasting...

Question 16

For some types of assets,such as accounts receivable,asset growth typically ____________________ future sales growth.

Accepted Answer

The answer of For some types of assets,such as accounts...

Question 17

Common-size financial statements recast each statement item as

Accepted Answer

A)   a percentage of the "bottom line."
B)   a percentage using industry averages for the "base number."
C)   a percentage using a base year number for each line item.
D)   a percentage of some "base number" on the financial statement in question.

Question 18

An analyst using the inventory turnover ratio to calculate future levels of inventory may face the problem that

Accepted Answer

A)   the method reduces the potential understatement inherent in average balances.
B)   the method can introduce artificial volatility in ending balances.
C)   the method results in understating inventory each year.
D)   the method results in overstating inventory each year.

Question 19

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

Accepted Answer