D076 Finance Skills for Managers - U9
(Part 1) Question and answers
correctly solved 2025/2026
Purpose of Financial Forecasting - correct answer ✔Help managers make decisions on future
performance
Helps decision makers understand how actions taken today can impact the firm's future performance
Financial Forecasting - 3 Basic Steps - correct answer ✔1. Project the firms sales revenues and expenses
over the planning period
2. Estimate the levels of investment in current and fixed assets that are needed to support the projected
sales forecast.
3. Determine the firm's financing needs throughout the planning period that are required to fund its
assets.
sales forcast - correct answer ✔The Key ingredient in a firm's planning process
It reflects: Past trend in sales that is expected to carry through into the new year
The influence of any anticipated events that might materially affect that trend
profit forecasting - correct answer ✔is the projection of future earnings after all the projected costs are
subtracted from the projected sales.
Future earnings = Projected Costs - Projected Sales
, Balance Sheet Forecasting - correct answer ✔is typically done in conjunction with projecting in come
statement.
Helps understand future asset earning and potential of the company
Sources and uses of funds
Forecasting Financing Needs - correct answer ✔Additional Financing also called:
Discretionary Financing Needed (DFN)
External Financing Needed (EFN)
Additional Funds Needed (AFN)
Growth requires increase in assets in the form of additional working capital. More inventory more
receivables, more fixed assets
Budgeting Vs Forecasting (NOT THE SAME) - correct answer ✔Budgeting - Where management wants
to take the company. Quantifies the expected performance that a company wants to achieve in a future
period.
Forecasting - Weather the company is heading in the right direction. Estimates the number of sales that
will be achieved in the future to understand the future financial needs of the company.
Budgeting - correct answer ✔is a detailed representation of the future results, financial position, and
cash flows that management wants to achieve during a certain period. Includes variance analysis
Forecasting - correct answer ✔HOW MUCH MONEY THE COMPANY NEEDS
(Part 1) Question and answers
correctly solved 2025/2026
Purpose of Financial Forecasting - correct answer ✔Help managers make decisions on future
performance
Helps decision makers understand how actions taken today can impact the firm's future performance
Financial Forecasting - 3 Basic Steps - correct answer ✔1. Project the firms sales revenues and expenses
over the planning period
2. Estimate the levels of investment in current and fixed assets that are needed to support the projected
sales forecast.
3. Determine the firm's financing needs throughout the planning period that are required to fund its
assets.
sales forcast - correct answer ✔The Key ingredient in a firm's planning process
It reflects: Past trend in sales that is expected to carry through into the new year
The influence of any anticipated events that might materially affect that trend
profit forecasting - correct answer ✔is the projection of future earnings after all the projected costs are
subtracted from the projected sales.
Future earnings = Projected Costs - Projected Sales
, Balance Sheet Forecasting - correct answer ✔is typically done in conjunction with projecting in come
statement.
Helps understand future asset earning and potential of the company
Sources and uses of funds
Forecasting Financing Needs - correct answer ✔Additional Financing also called:
Discretionary Financing Needed (DFN)
External Financing Needed (EFN)
Additional Funds Needed (AFN)
Growth requires increase in assets in the form of additional working capital. More inventory more
receivables, more fixed assets
Budgeting Vs Forecasting (NOT THE SAME) - correct answer ✔Budgeting - Where management wants
to take the company. Quantifies the expected performance that a company wants to achieve in a future
period.
Forecasting - Weather the company is heading in the right direction. Estimates the number of sales that
will be achieved in the future to understand the future financial needs of the company.
Budgeting - correct answer ✔is a detailed representation of the future results, financial position, and
cash flows that management wants to achieve during a certain period. Includes variance analysis
Forecasting - correct answer ✔HOW MUCH MONEY THE COMPANY NEEDS
