TEST BANK
Principles of Finance
s
03/30/22 1
, Principles of Finance
Chapter 18
Test Bank
Financial Forecasti ng
These questions and problems can all be solved in a classroom setting using a handheld
financial calculator.
True or False Questions
1. Debtors create projections of a firm’s financials in order to evaluate its ability to repay its
loans.
A. True
B. False
Section 18.1 LO 1 Easy
2. A firm’s historical performance is a starting point for projecting its future performance, but
there is an underlying assumption that the past repeats itself.
A. True
B. False
Section 18.2 LO 3 Easy
3. A projected income statement on an accrual basis will provide limited information on the
firm’s ability to generate cash.
A. True
B. False
Section 18.5 LO 1 Easy
4. Depreciation and amortization expense are noncash accounting charges and are therefore
addbacks to net income to evaluate cash from operations.
A. True
B. False
Section 18.5 LO 2 Easy
Multiple Choice Questions
1. Phi Co. projects sales of $1,535,000 for the year, which will entirely be on account. If its
accounts receivable turnover ratio is 10 times, how much would it project to have in
accounts receivable at the end of the year?
A. $1,535,000
B. $153,500
C. $160,900
03/30/22 2
Principles of Finance
s
03/30/22 1
, Principles of Finance
Chapter 18
Test Bank
Financial Forecasti ng
These questions and problems can all be solved in a classroom setting using a handheld
financial calculator.
True or False Questions
1. Debtors create projections of a firm’s financials in order to evaluate its ability to repay its
loans.
A. True
B. False
Section 18.1 LO 1 Easy
2. A firm’s historical performance is a starting point for projecting its future performance, but
there is an underlying assumption that the past repeats itself.
A. True
B. False
Section 18.2 LO 3 Easy
3. A projected income statement on an accrual basis will provide limited information on the
firm’s ability to generate cash.
A. True
B. False
Section 18.5 LO 1 Easy
4. Depreciation and amortization expense are noncash accounting charges and are therefore
addbacks to net income to evaluate cash from operations.
A. True
B. False
Section 18.5 LO 2 Easy
Multiple Choice Questions
1. Phi Co. projects sales of $1,535,000 for the year, which will entirely be on account. If its
accounts receivable turnover ratio is 10 times, how much would it project to have in
accounts receivable at the end of the year?
A. $1,535,000
B. $153,500
C. $160,900
03/30/22 2
