Question 1

Discretionary financing needs implies

Accepted Answer

A)   that management may choose between various forms of debt and equity.
B)   that the purchases being financed are optional rather than necessary.
C)   that management has considerable discretion in how to dispose of retained earnings.
D)   that management may choose between debt, new equity or retained earnings.

Question 2

Broad Cloth, Inc.'s average collection period is 15 days. The vice-president of marketing has projected credit sales of $2. million for October, $2.5 million for November and $3 million for December. Compute cash collections for November and December. Assume that all months have 30 days.

Accepted Answer

November collections = last 50% of Octob...

Question 3

Which of the following will decrease cumulative borrowing on the cash budget?

Accepted Answer

A)   A decrease in interest expense
B)   A decrease in collections
C)   An increase in equipment purchases
D)   Both A and B

Question 4

Based on the information in Table 3, what is Thompson's projected cash balance as of April 1, 2017?

Accepted Answer

A)   $32,000
B)   $4,300
C)   $25,000
D)   None of the above

Question 5

In 2016 Mango Corporation had net income of $5 million on sales of $50 million. The 2016 balance sheet showed current liabilities of $12 million, long-term debt of $18 million and equity of $45 million. The sales forecast for 2017 is $54 million. If Mango pays no dividends, what is the forecasted increase or decrease in equity at the end of 2017?

Accepted Answer

A)   $49.5 million
B)   $ 4.5 million
C)   $5.4 million
D)   $(5.4)  million

Question 6

A typical corporate planning process will encompass

Accepted Answer

A)   a short-term financial plan.
B)   a long-term financial plan.
C)   a strategic plan.
D)   all of the above.

Question 7

Cash budgets usually include details such as the timing of materials purchases, interest payments, and the like.

Accepted Answer

A) True 
 B)False

Question 8

Considering each action independently and holding other things constant, which of the following actions would increase a firm's discretionary financing needed (the need for additional capital) ?

Accepted Answer

A)   A decrease in the firm's accounts receivable average collection period
B)   An increase in the firm's profit margin
C)   A decrease in the firm's inventory turnover
D)   A decrease in the expected growth rate in sales

Question 9

The percentages used in the percent-of-sales method comes from pro forma financial statements.

Accepted Answer

A) True 
 B)False

Question 10

The "percentage" used in the percent-of-sales calculation can be obtained from

Accepted Answer

A)   the most recent financial statement item as a percent of current sales.
B)   an average computed over several years.
C)   an analyst's judgment.
D)   all of the above.

Question 11

What are the key questions that a strategic plan attempts to answer? How does it relate to financial plans?

Accepted Answer

The strategic plan asks such fundamental...

Question 12

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Accepted Answer

A)   The payment of accounts payable
B)   The payment of depreciation expense
C)   The payment of accrued income taxes
D)   All of the above

Question 13

Strategic planning encompasses all of the following EXCEPT:

Accepted Answer

A)   a cash budget.
B)   a description of the firm's core competencies and activities.
C)   a definition of the firm's customers.
D)   a description of the firm's competitors and its own competitive strengths and weaknesses.

Question 14

Banner's projected current assets for 2018 are

Accepted Answer

A)   $1,000,000.
B)   $1,120,000.
C)   $1,500,000.
D)   $1,260,000.

Question 15

What is meant by discretionary financing?

Accepted Answer

Discretionary financing could be any typ...

Question 16

Long-term financial planning results in

Accepted Answer

A)   a cash budget.
B)   pro forma financial statements.
C)   a sales forecast for the next 1 to 3 years.
D)   a general narrative detailing near-term scenarios.

Question 17

Which of the following is a spontaneous source of financing?

Accepted Answer

A)   Accrued expenses
B)   Notes payable
C)   Common stock
D)   Paid-in capital

Question 18

The initiation of a major advertising campaign would be an example of an event that would affect past trends in sales when projecting statements.

Accepted Answer

A) True 
 B)False

Question 19

Banner's projected long-term debt for 2018 is

Accepted Answer

A)   $700,000.
B)   $880,000.
C)   $380,000.
D)   $300,000.

Question 20

Which of the following is the correct method of determining discretionary financing needed (DFN) ?

Accepted Answer

A)   Projected change in assets, divided by projected change in liabilities, plus projected change in owner's equity
B)   Projected change in assets, times projected change in owner's equity, minus projected change in liabilities
C)   Projected change in owner's equity, minus projected change in liabilities, plus projected change in assets
D)   Projected change in assets, minus projected change in liabilities, minus projected change in owner's equity

Exam 17: Financial Forecasting and Planning

Banner's projected current assets for 2018 are

Correct Answer
verified

Which of the following is the correct method of determining discretionary financing needed (DFN) ?

Correct Answer
verified

What is meant by discretionary financing?

Correct Answer
verified
Discretionary financing could be any typ...
View Answer

Long-term financial planning results in

Correct Answer
verified

What are the key questions that a strategic plan attempts to answer? How does it relate to financial plans?

Correct Answer
verified
The strategic plan asks such fundamental...
View Answer

The initiation of a major advertising campaign would be an example of an event that would affect past trends in sales when projecting statements.

Correct Answer
verified

The percentages used in the percent-of-sales method comes from pro forma financial statements.

Correct Answer
verified

The "percentage" used in the percent-of-sales calculation can be obtained from

Correct Answer
verified

Which of the following is a spontaneous source of financing?

Correct Answer
verified

Considering each action independently and holding other things constant, which of the following actions would increase a firm's discretionary financing needed (the need for additional capital) ?

Correct Answer
verified

Discretionary financing needs implies

Correct Answer
verified

Broad Cloth, Inc.'s average collection period is 15 days. The vice-president of marketing has projected credit sales of $2. million for October, $2.5 million for November and $3 million for December. Compute cash collections for November and December. Assume that all months have 30 days.

Correct Answer
verified
November collections = last 50% of Octob...
View Answer

Cash budgets usually include details such as the timing of materials purchases, interest payments, and the like.

Correct Answer
verified

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Correct Answer
verified

Based on the information in Table 3, what is Thompson's projected cash balance as of April 1, 2017?

Correct Answer
verified

Which of the following will decrease cumulative borrowing on the cash budget?

Correct Answer
verified

A typical corporate planning process will encompass

Correct Answer
verified

Strategic planning encompasses all of the following EXCEPT:

Correct Answer
verified

Correct Answer
verified

Banner's projected long-term debt for 2018 is

Correct Answer
verified

Exam 17: Financial Forecasting and Planning

Banner's projected current assets for 2018 are

Correct AnswerverifiedShow Answer

Which of the following is the correct method of determining discretionary financing needed (DFN) ?

Correct AnswerverifiedShow Answer

What is meant by discretionary financing?

Correct AnswerverifiedDiscretionary financing could be any typ...View AnswerShow Answer

Long-term financial planning results in

Correct AnswerverifiedShow Answer

What are the key questions that a strategic plan attempts to answer? How does it relate to financial plans?

Correct AnswerverifiedThe strategic plan asks such fundamental...View AnswerShow Answer

The initiation of a major advertising campaign would be an example of an event that would affect past trends in sales when projecting statements.

Correct AnswerverifiedShow Answer

The percentages used in the percent-of-sales method comes from pro forma financial statements.

Correct AnswerverifiedShow Answer

The "percentage" used in the percent-of-sales calculation can be obtained from

Correct AnswerverifiedShow Answer

Which of the following is a spontaneous source of financing?

Correct AnswerverifiedShow Answer

Considering each action independently and holding other things constant, which of the following actions would increase a firm's discretionary financing needed (the need for additional capital) ?

Correct AnswerverifiedShow Answer

Discretionary financing needs implies

Correct AnswerverifiedShow Answer

Broad Cloth, Inc.'s average collection period is 15 days. The vice-president of marketing has projected credit sales of $2. million for October, $2.5 million for November and $3 million for December. Compute cash collections for November and December. Assume that all months have 30 days.

Correct AnswerverifiedNovember collections = last 50% of Octob...View AnswerShow Answer

Cash budgets usually include details such as the timing of materials purchases, interest payments, and the like.

Correct AnswerverifiedShow Answer

Which of the following expenses should be included as a cash outlay in the preparation of a cash budget?

Correct AnswerverifiedShow Answer

Based on the information in Table 3, what is Thompson's projected cash balance as of April 1, 2017?

Correct AnswerverifiedShow Answer

Which of the following will decrease cumulative borrowing on the cash budget?

Correct AnswerverifiedShow Answer

A typical corporate planning process will encompass

Correct AnswerverifiedShow Answer

Strategic planning encompasses all of the following EXCEPT:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Banner's projected long-term debt for 2018 is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Discretionary financing could be any typ...
View Answer

Correct Answer
verified

Correct Answer
verified
The strategic plan asks such fundamental...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
November collections = last 50% of Octob...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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