Question 1

Companies generally prefer to maintain some minimum cash balance.

Accepted Answer

A) True 
 B)False

Question 2

The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.

Accepted Answer

A) True 
 B)False

Question 3

The following is the balance sheet for 2015 for Marbell Inc.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> Sales for 2015 were $500,000.Sales for ...

Question 4

Profit is generally adequate to finance significant growth.

Accepted Answer

A) True 
 B)False

Question 5

In using a systems approach to financial planning,it is not necessary to develop a:

Accepted Answer

A)   pro forma income statement.
B)   cash budget.
C)   pro forma balance sheet.
D)   contingent liability plan.

Question 6

Pro forma income statements and balance sheets refer to projected financial statements.

Accepted Answer

A) True 
 B)False

Question 7

The generation of sales and profits ensures that there will be adequate cash on hand to meet financial obligations as they come due.

Accepted Answer

A) True 
 B)False

Question 8

A firm has beginning inventory of 400 units at a cost of $11 each.Production during the period was 650 units at $12 each.If sales were 700 units,what is the cost of goods sold (assume FIFO) ?

Accepted Answer

A)   $9,000
B)   $8,000
C)   $7,700
D)   $8,100

Question 9

Growth in sales volume precludes a shortage of funds.

Accepted Answer

A) True 
 B)False

Question 10

When a financial manager calculates production requirements they add Projected Sales to desired ending inventory then subtract beginning inventory.

Accepted Answer

A) True 
 B)False

Question 11

In the construction of the cash payments schedule,the major cash payment is generally:

Accepted Answer

A)   the general and administrative expense.
B)   costs associated with inventory manufactured.
C)   interest and dividends.
D)   payments for new plant and equipment.

Question 12

The percent-of-sales method of financial forecasting:

Accepted Answer

A)   is more detailed than a cash budget approach.
B)   requires more time than a cash budget approach.
C)   assumes that balance sheet accounts maintain a constant relationship to sales.
D)   provides a month-to-month breakdown of data.

Question 13

In the percent-of-sales method:

Accepted Answer

A)   as the dividend payout ratio goes up,the required new funds also rise.
B)   as the dividend payout ratio rises,required new funds decline.
C)   the dividend payout ratio does not affect new funds.
D)   a change to the ex-dividend date causes the required new funds to change.

Question 14

The key initial element in developing pro forma statements is:

Accepted Answer

A)   a cash budget.
B)   an income statement.
C)   a sales forecast.
D)   a collections schedule.

Question 15

What are the 4 steps in developing a pro forma income statement?

Accepted Answer

1.Establish a sales projection.
2.Deter...

Question 16

In using a systems approach to financial planning,it is necessary to develop everything except:

Accepted Answer

A)   pro forma income statement.
B)   cash budget.
C)   pro forma balance sheet.
D)   a collection schedule.

Question 17

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.

Accepted Answer

A) True 
 B)False

Question 18

A firm utilizing FIFO inventory accounting would,in calculating gross profits,assume that:

Accepted Answer

A)   all sales were from current production.
B)   all sales were from beginning inventory.
C)   sales were from beginning inventory until it was depleted,and then use sales from current production.
D)   all sales were for cash.

Question 19

In the percent-of-sales method if (A/S1) and L/S1) both increase,then:

Accepted Answer

A)   RNF stays the same.
B)   RNF goes down.
C)   RNF goes up.
D)   more information is needed.

Question 20

ABC Co.has forecasted June sales of 600 units and July sales of 900 units.The company maintains ending inventory equal to 130% of next month's sales.June beginning inventory reflects this policy.What is June's required production?

Accepted Answer

A)   990 units
B)   -0- units
C)   1,000 units
D)   800 units

Exam 4: Financial Forecasting

The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.

Correct AnswerverifiedShow Answer

Companies generally prefer to maintain some minimum cash balance.

Correct AnswerverifiedShow Answer

The generation of sales and profits ensures that there will be adequate cash on hand to meet financial obligations as they come due.

Correct AnswerverifiedShow Answer

Pro forma income statements and balance sheets refer to projected financial statements.

Correct AnswerverifiedShow Answer

Profit is generally adequate to finance significant growth.

Correct AnswerverifiedShow Answer

In the percent-of-sales method:

Correct AnswerverifiedShow Answer

When a financial manager calculates production requirements they add Projected Sales to desired ending inventory then subtract beginning inventory.

Correct AnswerverifiedShow Answer

The key initial element in developing pro forma statements is:

Correct AnswerverifiedShow Answer

A firm has beginning inventory of 400 units at a cost of $11 each.Production during the period was 650 units at $12 each.If sales were 700 units,what is the cost of goods sold (assume FIFO) ?

Correct AnswerverifiedShow Answer

What are the 4 steps in developing a pro forma income statement?

Correct Answerverified1.Establish a sales projection. 2.Deter...View AnswerShow Answer

ABC Co.has forecasted June sales of 600 units and July sales of 900 units.The company maintains ending inventory equal to 130% of next month's sales.June beginning inventory reflects this policy.What is June's required production?

Correct AnswerverifiedShow Answer

A firm utilizing FIFO inventory accounting would,in calculating gross profits,assume that:

Correct AnswerverifiedShow Answer

The percent-of-sales method of financial forecasting:

Correct AnswerverifiedShow Answer

In using a systems approach to financial planning,it is necessary to develop everything except:

Correct AnswerverifiedShow Answer

In the construction of the cash payments schedule,the major cash payment is generally:

Correct AnswerverifiedShow Answer

In the percent-of-sales method if (A/S1) and L/S1) both increase,then:

Correct AnswerverifiedShow Answer

The following is the balance sheet for 2015 for Marbell Inc.

Correct Answerverified Sales for 2015 were $500,000.Sales for ...View AnswerShow Answer

Growth in sales volume precludes a shortage of funds.

Correct AnswerverifiedShow Answer

In using a systems approach to financial planning,it is not necessary to develop a:

Correct AnswerverifiedShow Answer

The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.

Correct AnswerverifiedShow Answer

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1.Establish a sales projection.
2.Deter...
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In the percent-of-sales method if (A/S₁) and L/S₁) both increase,then:

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Sales for 2015 were $500,000.Sales for ...
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