w4 w6 c4 Concept Fsa Problem
w4 w6 c4 Concept Fsa Problem
w4 w6 c4 Concept Fsa Problem
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the assumption that the values of certain accounts can be forced to take on desired
levels
the assumption that the firm's past financial condition is an accurate predictor of its
future
the assumption that the firm faces linear total revenue and total operating cost
functions
Which one of these best describes the relationship between net working * 1 point
capital (NWC) and sales?
NWC changes by a greater percentage than the change in sales, but the change is
linear in nature.
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NWC changes in direct relation to sales, but the change may be less than
proportional with sales.
The ________ method of developing a pro forma balance sheet estimates * 1 point
values of certain balance sheet accounts while external financing is used
as a balancing, or plug, figure.
cash flow
percent-of-sales
judgmental
accrual
1. The net fixed asset investment (NFAI) is defined as the change in net * 1 point
fixed assets plus depreciation. 2.
The net current asset investment (NCAI) is defined as the change in current
assets minus the change in sum of the accounts payable and accruals
b h
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both statements are true
All of the following are part of the financial planning process except: * 1 point
minimizing risk.
1. The statement of cash flows allows the financial manager and other * 1 point
interested parties to analyze a firm's past and possibly future profitability.
2. Net operating profit after taxes
(NOPAT) represents a firm's earnings after deducting both interest and
taxes.
Given a financial manager's preference for faster receipt of cash flows, * 1 point
________.
the manager is not concerned with depreciable life, because once purchased,
depreciation is considered a sunk cost
One way a firm can reduce the amount of cash it needs in any month is to * 1 point
accrue taxes
In the next planning period, a firm plans to change its policy of all cash * 1 point
sales and initiate a credit policy requiring payment within 30 days. The
statements that will be directly affected immediately are the ________.
A financial planning model will generally include all of the following except * 1 point
the:
projected sales.
Which of the following would be the least likely to utilize a cash budget * 1 point
lenders
public investors
top management
middle management
determine the mix of securities that the company will need to issue.
A firm plans to retire outstanding bonds in the next planning period. Which * 1 point
1. A firm's free cash flow (FCF) represents the amount of cash flow * 1 point
available to investors (stockholders and bondholders) after the firm has
met all operating needs and after having paid for net fixed asset
investments and net current asset investments
2. Operating cash flow (OCF) is equal to a firm's net
operating profits after taxes minus all non-cash charges.
Which one of the following is not a reason for compiling financial plans? * 1 point
Forcing consistency
Considering options
Contingency planning
Outputs from a financial plan would include such items as: * 1 point
In a period of rising sales utilizing past cost and expense ratios (percent-of- * 1 point
sales method), when preparing pro forma financial statements and
planning financing, will tend to ________.
Utilizing past cost and expense ratios (percent-of-sales method) when * 1 point
preparing pro forma financial statements will tend to ________.
In general, firms that are subject to a high degree of ________, relatively * 1 point
short production cycles, or both, tend to use shorter planning horizons.
financial certainty
profitability
financial planning
operating certainty
1. Free cash flow (FCF) is the cash flow a firm generates from its normal * 1 point
operations; calculated as EBIT minus taxes plus depreciation
2. A firm's operating cash flow (OCF) is the
cash flow it generates from its normal operations: producing and selling its
output of goods or services.
planning by use of
spreadsheet programs.
leverage ratios
planning outputs.
Which one of the following is not typically included among the three major * 1 point
components of a financial planning model?
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have no effect on
accurately predict
overstate
understate
A firm has prepared the coming year's pro forma balance sheet resulting in * 1 point
a plug figure in a preliminary statement—called the external financing
required—of negative P250,000. The firm may prepare to ________.
In preparing a cash budget, the ________ seasonal and uncertain a firm's * 1 point
cash flows, the ________ the number of budgeting intervals it should use.
less; greater
more; greater
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more; greater
less; fewer
more; fewer
repurchase of stock
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leverage decisions
short-term borrowing
long-term investments
short-term investments
the prediction of a firm's sales over a given period through surveys sent to financial
analysts
developing the pro forma income statement to forecast sales and then express the
various income statement items as percentage of projected sales
Clear selection
The final variable to have its value determined in a financial plan is often * 1 point
referred to as the:
net income.
growth forecast.
balancing item
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ba a c g te
cash sales
cash receipts
cash disbursements
When most of the elements of a financial plan are related to sales levels, * 1 point
the plan is:
Once sales are forecasted, ________ must be generated to estimate required * 1 point
raw materials.
a purchases budget
a production plan
an operational plan
a cash budget
always using the prior year's data for estimates of the future
developing a pro forma income statement to forecast sales and then express the
various income statement items as percentage of projected sales
using scenario analysis, or "what if" approach, to analyze cash flows under a variety
of circumstances
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