Financial Planning And Forecasting

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Question 1

Free

Multiple Choice

Which of the following is a set of financial statements depicting an operating division of a firm's expected financial situation in the foreseeable future under the most reasonable set of assumptions concerning relevant factors?

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Base case projections

Deseaonalized financial statements

Naïve financial statements

Pro forma financial statements

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Question 2

Free

Multiple Choice

The set of assumptions underlying the firm's financial plan and the resulting projected financial statements are accordingly often referred to as which of the following?

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Base case projections

Deseaonalized financial statements

Naïve financial statements

Pro forma financial statements

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Question 3

Free

Multiple Choice

Financial planning involves estimating projected cash flows, which is useful for all the following EXCEPT:

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setting internal goals.

providing information to shareholders and other external stakeholders concerning the firm's future expectations.

estimating the firm's future needs for internal and external financing.

auditors to determine if the company's annual report is true and correct.

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Question 4

Free

Multiple Choice

The simplest approach to estimating a future period's sales is to assume that they will be equal to those of the latest observed period. In statistics, this is often simply referred to as which of the following?

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Base case approach

Deseaonalized approach

Naïve approach

Pro forma approach

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Question 5

Free

Multiple Choice

Forecasted sales drive all of the following EXCEPT:

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the amount of assets needed.

the liabilities needed.

the external funds needed.

earnings per share on the annual report.

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Question 6

Multiple Choice

Which of the following is defined as assuming that future sales will be equal to the average historical value across some relevant period?

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Average approach

Base case approach

Naïve approach

Pro forma approach

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Question 7

Multiple Choice

Which of the following is used to remove the effects of seasonality from historic data?

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Average approach

Base case approach

Deseasonalized approach

Pro forma approach

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Question 8

Multiple Choice

Which of the following is the practice of one firm selling to another on credit terms?

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Accounts payable

Accounts receivable

Barter transactions

Trade credit

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Question 9

Multiple Choice

What is computed by dividing the amount of assets tied directly to sales (A*) by the amount of current sales (S0)?

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Capital intensity ratio

Current ratio

Quick ratio

Spontaneous assets

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Question 10

Multiple Choice

Which of the following is the amount of external financing a firm must seek in order to change the asset base as necessary to support a different level of sales?

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Additional funds needed

Capital intensity ratio

Current ratio

Spontaneous assets

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Question 11

Multiple Choice

Which of the following can be computed as: necessary increase in assets minus spontaneous increase in liabilities minus projected increase in retained earnings?

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Additional funds needed

Capital intensity ratio

Current ratio

Spontaneous assets

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Question 12

Multiple Choice

If a firm has excess capacity when calculating AFN (Additional Funds Needed), A* will most likely equal which of the following?

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Total assets

Current assets

Fixed assets

Lumpy assets

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Question 13

Multiple Choice

Which of the following are considered "chunky" or "lumpy" assets?

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Total assets

Current assets

Fixed assets

Additional funds needed (AFN)

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Question 14

Multiple Choice

The additional funds needed by the firm can be calculated by assuming which of the following?

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The firm's additional sales will grow proportionately as assets are purchased.

The firm's additional capital needed will grow proportionately with projected changes in sales.

The firm's balance sheet will grow proportionately with projected changes in sales.

The firm's additional sales will grow proportionately as capital is brought on to the balance sheet.

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Question 15

Multiple Choice

Which statement is most correct regarding how pro forma financial statements can be used to estimate additional funds needed?

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Pro forma statements can be used to iteratively refine the amount of additional funds needed.

Pro forma statements are less precise than other methods for determining additional funds needed.

Pro forma statements take into account changes in cost of goods sold that other methods of determining additional funds needed ignore.

Pro forma statements take into account dividend payments that other methods of determining additional funds needed ignore.

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Question 16

Multiple Choice

Which of the following defines the term deseasonalize?

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To use pro forma statements to determine future years' forecasts

To remove the effects of seasonality from historic data

To remove fixed asset growth that does not tie into sales growth

To fix asset growth to smooth out the seasonality of sales growth

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Question 17

Multiple Choice

Which of the following defines MAPE?

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Median absolute percentage error, a measure of a financial statement's accuracy

Median absolute percentage error, a measure of a forecast's accuracy

Mean absolute percentage error, a measurement of a forecast's accuracy

Mean absolute percentage error, a measure of a financial statement's accuracy

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Question 18

Multiple Choice

First order effects are defined as which of the following?

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The subsequent, less observable effects of the change

The subsequent, more observable effects of the change

Higher order effects of the change

The immediately observable effects of changing one item on another

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Question 19

Multiple Choice

Which of the following defines iterative calculation?

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The practice of overriding a spreadsheet program or calculator in order to be able to compute an answer so as to take into account circular dependency in a system of equations.

The practice of ensuring there are no circular dependencies in a system of equations.

The practice of letting a spreadsheet program or calculator repeatedly compute an answer so as to take into account circular dependency in a system of equations.

The practice of using the AFN formula to calculate an answer in order to avoid circular dependencies in a system of equations.

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Question 20

Multiple Choice

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017
Sales $10,000,000 $10,500,000 $10,700,000 $11,000,000 $12,000,000

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$10,000,000

$10,550,000

$10,840,000

$12,000,000

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Financial Planning And Forecasting

Which of the following is a set of financial statements depicting an operating division of a firm's expected financial situation in the foreseeable future under the most reasonable set of assumptions concerning relevant factors?

The set of assumptions underlying the firm's financial plan and the resulting projected financial statements are accordingly often referred to as which of the following?

Financial planning involves estimating projected cash flows, which is useful for all the following EXCEPT:

The simplest approach to estimating a future period's sales is to assume that they will be equal to those of the latest observed period. In statistics, this is often simply referred to as which of the following?

Forecasted sales drive all of the following EXCEPT:

Which of the following is defined as assuming that future sales will be equal to the average historical value across some relevant period?

Which of the following is used to remove the effects of seasonality from historic data?

Which of the following is the practice of one firm selling to another on credit terms?

What is computed by dividing the amount of assets tied directly to sales (A*) by the amount of current sales (S0)?

Which of the following is the amount of external financing a firm must seek in order to change the asset base as necessary to support a different level of sales?

Which of the following can be computed as: necessary increase in assets minus spontaneous increase in liabilities minus projected increase in retained earnings?

If a firm has excess capacity when calculating AFN (Additional Funds Needed), A* will most likely equal which of the following?

Which of the following are considered "chunky" or "lumpy" assets?

The additional funds needed by the firm can be calculated by assuming which of the following?

Which statement is most correct regarding how pro forma financial statements can be used to estimate additional funds needed?

Which of the following defines the term deseasonalize?

Which of the following defines MAPE?

First order effects are defined as which of the following?

Which of the following defines iterative calculation?

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017Sales $10,000,000 $10,500,000 $10,700,000 $11,000,000 $12,000,000

Suppose a firm has had the historical sales figures shown as follows. What would be the forecast for next year's sales using the naïve approach? Year 2013 2014 2015 2016 2017
Sales $10,000,000 $10,500,000 $10,700,000 $11,000,000 $12,000,000