FINANCIAL STATEMENT ANALYSIS EXAM 3 |75 COMPLETE
AND GRADED QUESTIONS AND ANSWERS 2026 LATEST
UPDATED | 100% GRADED CORRECT | 100% GUARANTEED
TO PASS | GET A+
The usual financial statement forecasting process is completed in the following order: balance
sheet, income statement, statement of cash flows. - (answer)False
Which of the following is not a typical adjustment made to the income statement for projection
purposes?
A. Adjusting net income for perceived under- or over-accruals
B. Adjusting revenues to only include organic revenue growth
C. Separating operating and non-operating items
D. Removing transitory items such as restructuring charges
E. None of the above - (answer)B. Adjusting revenues to only include organic revenue growth
Forecasted depreciation expense, commonly estimated as: [(Current year depreciation expense/
Prior year PPE, net) x Current year PPE, net]. is added back to net income in the cash flow from
operating activities section of the Statement of Cash Flows. - (answer)True
,Ashbury Corporation reports 2016 and 2017 total revenues of $89.1 million and $100.8 million
respectively. If we expect prior growth to persist, we would forecast a revenue growth rate of:
A. 12%
B. 10%
C. None of these are correct
D. 13%
E. 26% - (answer)d. 13% ($100.8/89.1)-1=13%
Payton Inc. reports in its Year 7 annual report, sales of $7362 million and cost of goods sold of
$2945 million. For next year, you project that sales will grow by 3% and that cost of goods sold
percentage will be 1 percentage point higher. Projected COGS for Year 8 will be:
a. 3109 million
b. 2945 million
c. there is not enough info
d. 3019 million
e. 3033 million - (answer)a. 3109 million (7362 million x 1.03 x ((2945/7362)+1%)=3109
,Hudson Company reports in its Year 7 annual report, sales of $299 million, long-term debt of
$24 million, and interest expense of $882,000. If sales are projected to increase by 4% next year,
projected interest expense for Year 8 will be:
a. 846720
b. 917280
c. None of these
d. 882000
e. 815670 - (answer)d. 882000 (the most common approach to non-operating expenses is to
assume that they do not change from year to year, unless we believe interest rates are likely to
shift greatly during the forecast period.)
When forecasting balance sheet financials, an unusually high forecasted cash balance suggests
which of the following?
a. Sales are projected to increase in coming years
b. the company will need to sell additional stock
c. the company is generating a lot of cash, most typically from operations
d. AR have dipped to an unacceptable level.
e. None of the above - (answer)C. The company is generating a lot of cash, most typically from
operations
, Your Health Corporation reported sales of $159,773 million, PPE net of 9158 million, and capital
expenditures of 2077 million in the current year. If sales are projected to increase 4% per year
over the next five years, what is the projected capital expenditures (purchases of new PPE) for
the following year?
a. 2160 million
b. 9471 million
c. 2187 million
d. 6440 million
e. 2077 million - (answer)a. 2160 million
2077/159,773=1.3%
$159,773 million x 1.04 = $166,164 million x 1.3% = 2160 million
When forecasting the balance sheet, what happens when the initial balance sheet yields estimated
total assets greater than the sum of total liabilities and equity?
a. the company will need additional financing from external sources
b. the company will not be able to pay for expenses in the future
c. the company projected a loss
d. the company has negative stockholders' equity
AND GRADED QUESTIONS AND ANSWERS 2026 LATEST
UPDATED | 100% GRADED CORRECT | 100% GUARANTEED
TO PASS | GET A+
The usual financial statement forecasting process is completed in the following order: balance
sheet, income statement, statement of cash flows. - (answer)False
Which of the following is not a typical adjustment made to the income statement for projection
purposes?
A. Adjusting net income for perceived under- or over-accruals
B. Adjusting revenues to only include organic revenue growth
C. Separating operating and non-operating items
D. Removing transitory items such as restructuring charges
E. None of the above - (answer)B. Adjusting revenues to only include organic revenue growth
Forecasted depreciation expense, commonly estimated as: [(Current year depreciation expense/
Prior year PPE, net) x Current year PPE, net]. is added back to net income in the cash flow from
operating activities section of the Statement of Cash Flows. - (answer)True
,Ashbury Corporation reports 2016 and 2017 total revenues of $89.1 million and $100.8 million
respectively. If we expect prior growth to persist, we would forecast a revenue growth rate of:
A. 12%
B. 10%
C. None of these are correct
D. 13%
E. 26% - (answer)d. 13% ($100.8/89.1)-1=13%
Payton Inc. reports in its Year 7 annual report, sales of $7362 million and cost of goods sold of
$2945 million. For next year, you project that sales will grow by 3% and that cost of goods sold
percentage will be 1 percentage point higher. Projected COGS for Year 8 will be:
a. 3109 million
b. 2945 million
c. there is not enough info
d. 3019 million
e. 3033 million - (answer)a. 3109 million (7362 million x 1.03 x ((2945/7362)+1%)=3109
,Hudson Company reports in its Year 7 annual report, sales of $299 million, long-term debt of
$24 million, and interest expense of $882,000. If sales are projected to increase by 4% next year,
projected interest expense for Year 8 will be:
a. 846720
b. 917280
c. None of these
d. 882000
e. 815670 - (answer)d. 882000 (the most common approach to non-operating expenses is to
assume that they do not change from year to year, unless we believe interest rates are likely to
shift greatly during the forecast period.)
When forecasting balance sheet financials, an unusually high forecasted cash balance suggests
which of the following?
a. Sales are projected to increase in coming years
b. the company will need to sell additional stock
c. the company is generating a lot of cash, most typically from operations
d. AR have dipped to an unacceptable level.
e. None of the above - (answer)C. The company is generating a lot of cash, most typically from
operations
, Your Health Corporation reported sales of $159,773 million, PPE net of 9158 million, and capital
expenditures of 2077 million in the current year. If sales are projected to increase 4% per year
over the next five years, what is the projected capital expenditures (purchases of new PPE) for
the following year?
a. 2160 million
b. 9471 million
c. 2187 million
d. 6440 million
e. 2077 million - (answer)a. 2160 million
2077/159,773=1.3%
$159,773 million x 1.04 = $166,164 million x 1.3% = 2160 million
When forecasting the balance sheet, what happens when the initial balance sheet yields estimated
total assets greater than the sum of total liabilities and equity?
a. the company will need additional financing from external sources
b. the company will not be able to pay for expenses in the future
c. the company projected a loss
d. the company has negative stockholders' equity
