Finance chapter 4

Phil is working on a finaicial plan for the next three years. This period is referred to as which one of the following Planning horizon
Atlas industries combines the smaller investment proposals from each operational unit into a single project for planning purposes. This process is reffered to as which one if the following Aggregation
Which one of the following terms is applied to the financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income statement account values Percentage of sales method
Which of the following terms is defined as dividends paid expressed as a percentage of net income Dividend payout ratio
Which of the following correctly defines the retention ratio Addition. To retained earnings divided by net income
Which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales Capital intensity ratio
The internal growth rate of a firm is best described as the Maximum growth rate achievable excluding external financing of any kind
The sustainable growth rate of a firm is best described as the Maximum growth rate achievable excluding any external equity financing while maintaining a constant debt equity ratio
Financial planning Considers multiple options and scenarios for the next two to five years
Which one of the following statements concerning financial planning for a firm is correct Financial plans often contain alternative options based on economic developments
You are getting ready to prepare pro forma statements for your business. Which one of the following are you most apt to estimate first as you begin this process Sales forecast
Which of the following is correct Pro forma statements are projections, not guarantees
When utilizing the percentage of sales approach, managers Consider the current production capacity level, can project both net income and net cash flows
Which of the following is correct in relation to the pro forma statements Inventory changes are directly proportional to sales changes
When constructing a pro forms statement net working capital generally Varies proportionally with sales
A pro forma statement indicates that both sales and fixed assets are projected to increase by 7 percent over their current levels. Given this, you can safely assume that the firm Is currently operating at full capacity
Which of the following policies most directly affect the projection of the retained earnings balance to be used on a pro forma statements Dividend policy
A firm is operating at 90 percent of capacity. This information is primarily needed to project which one of the following accounts values when compiling pro forma statements Fixed assets

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