Changing the way you learn

Question 1

Question

The strategic financial plans are planned long-term financial actions and the anticipated financial impact of those actions.

Answer

True
False

Question 2

Question

If the net cash flow is less than the minimum cash balance, financing is required

Answer

True
False

Question 3

Question

Cash planning involves the preparation of the firm's income statement

Answer

True
False

Question 4

Question

A positive external funds requirement would indicate that the firm's financing is in excess of its needs and that funds would therefore be available for repaying debt, repurchasing stock, or increasing the dividend to stockholders.

Answer

True
False

Question 5

Question

The sales forecast, cash budget, and pro forma financial statements are the key outputs of the short-run (operating) financial plan

Answer

True
False

Question 6

Question

The excess cash balance is the amount available for investment by the firm if the desired minimum cash balance is less than the period's ending cash.

Answer

True
False

Question 7

Question

The "plug" figure that is used as a balancing account in the pro forma balance sheet is retained earnings

Answer

True
False

Question 8

Question

The pro forma statements provide the financial manager with the amount of external financing required to support a given level of sales as well as a basis for analyzing in advance the level of profitability and overall financial performance of the firm in the coming year

Answer

True
False

Question 9

Question

The cash budget gives the financial manager a clear view of the timing of the firm's expected profitability over a given period

Answer

True
False

Question 10

Question

A firm's net cash flow is the mathematical difference between the firm's beginning cash and its cash disbursements in each period

Answer

True
False

Question 11

Question

The financial planning process begins with short-run plans and budgets that in turn guide the formulation of long-run financial plans

Answer

True
False

Question 12

Question

A typical sales forecast, though concerned with future events, will usually be based on recent historical trends and events as well as on forecasts of economic prospects

Answer

True
False

Question 13

Question

Pro forma financial statements are used primarily to assess a firm's historical performance

Answer

True
False

Question 14

Question

Any firm with a positive growth rate in sales will require some amount of external funding, assuming all existing ratios are to be maintained

Answer

True
False

Question 15

Question

An increase in the firm's inventory balance will normally require additional financing, unless the increase is matched by an equally large decrease in some other assets account

Answer

True
False

Question 16

Question

The financial planning process begins with __________ financial plans that in turn guide the formation of __________ plans and budgets

Answer

long-run; operating
strategic; operating
short-run; long-run
long-run; short-run

Question 17

Question

The key aspects of the financial planning process are:

Answer

investment planning and profit planning
cash planning and financing
cash planning and investment planning
cash planning and profit planning

Question 18

Question

Pro form statements are used for:

Answer

profit planning
credit analysis
cash budgeting
all of the above

Question 19

Question

Which of the following would be the lease likely to utilize pro forma financial statements or a cash budget?

Answer

top management
middle management
investors
lenders

Question 20

Question

The __________ is a financial projection of the firm's short-term cash surpluses or shortages

Answer

operating plan
cash budget
strategic plan
pro forma income statement

Question 21

Question

__________ forecast is based on the relationships between the firm's sales and certain economic indicatiors

Answer

A sales
An internail
A pro forma
An external

Question 22

Question

Key inputs to short-term financial planning are:

Answer

leverage analysis
economic forecasts
sales forecasts, operating, and financial data
financial budgets

Question 23

Question

Of the following, generally, the easiest to estimate are:

Answer

cash sales
cash disburesments
cash receipts
short-term borrowings

Question 24

Question

The percent-of-sales method of preparing the pro forma income statement assumes that all costs are:

Answer

fixed
independent
constant
variable

Question 25

Question

___________ generally reflects the anticipated financial impact of long-term actions

Answer

an operating financial plan
a strategic financial plan
a pro forma income statement
a cash budget

Question 26

Question

The primary purpose in preparing a budget is:

Answer

for profit planning
for risk analysis
to estimate sales
for cash planning

Question 27

Question

All of the following accounts are used in the preparation of the cash budget, EXCEPT:

Answer

cash receipts
depreciation
cash disbursements
excess cash

Question 28

Question

Holding other things constant, the additional funds required for financing the firm's operations would be reduced with an increase in the firm's

Answer

dividend ration payout
profit margin
capital intensity ration
tax rate

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Chapter 15 - Financial Planning, Forecasting and Cash Budgets

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	Created by Cristian Quintanilla about 9 years ago