MBA 620, FINANCIAL MANAGEMENT (REVIEW)
True or false: An annual financial forecast for 2013 showing no external funding
required assures a company that no cash shortfalls are likely to occur. - Answers -
False
True or false: All else equal, increasing the assumed payables period in a financial
forecast will decrease external funding required. - Answers -True
True or false: A drawback of forecasting using spreadsheets is that typical spreadsheet
programs are not equipped to deal with the circularity involving interest expense and
debt. - Answers -False
True or false: Scenario analysis involves changing one input to a financial forecast,
whereas sensitivity analysis involves changing multiple inputs. - Answers -False
True or false: Cash budgets are less informative than pro forma financial statements. -
Answers -True
You are estimating your company's external financing needs for the next year. At the
end of the year you expect that owners' equity will be $80 million, total assets will
amount to $170 million, and total liabilities will be $70 million. How much will your firm
need to borrow, or otherwise acquire, from outside sources during the year? - Answers
-$20 million
($170 million - $70 million) - $80 million = $20 million
To estimate Missed Places Inc.'s (MP) external financing needs, the CFO needs to
figure out how much equity her firm will have at the end of next year. At the end of the
most recent fiscal year, MP's retained earnings were $158,000. The Controller has
estimated that over the next year, gross profits will be $360,700, earnings after tax will
total $23,400, and MP will pay $12,400 in dividends. What are the estimated retained
earnings at the end of next year? - Answers -$169,000
$158,000 + $23,400 - $12,400 = $169,000
Assume each month has 30 days and AmDocs has a 60-day accounts receivable
period. During the second calendar quarter of the year (April, May, and June), AmDocs
will collect payment for the sales it made during which months? - Answers -February,
March, and April
The Limited collects 25% of sales in the month of sale, 60% of sales in the month
following the month of sale, and 15% of sales in the second month following the month
of sale. During the month of April, the firm will collect:
True or false: An annual financial forecast for 2013 showing no external funding
required assures a company that no cash shortfalls are likely to occur. - Answers -
False
True or false: All else equal, increasing the assumed payables period in a financial
forecast will decrease external funding required. - Answers -True
True or false: A drawback of forecasting using spreadsheets is that typical spreadsheet
programs are not equipped to deal with the circularity involving interest expense and
debt. - Answers -False
True or false: Scenario analysis involves changing one input to a financial forecast,
whereas sensitivity analysis involves changing multiple inputs. - Answers -False
True or false: Cash budgets are less informative than pro forma financial statements. -
Answers -True
You are estimating your company's external financing needs for the next year. At the
end of the year you expect that owners' equity will be $80 million, total assets will
amount to $170 million, and total liabilities will be $70 million. How much will your firm
need to borrow, or otherwise acquire, from outside sources during the year? - Answers
-$20 million
($170 million - $70 million) - $80 million = $20 million
To estimate Missed Places Inc.'s (MP) external financing needs, the CFO needs to
figure out how much equity her firm will have at the end of next year. At the end of the
most recent fiscal year, MP's retained earnings were $158,000. The Controller has
estimated that over the next year, gross profits will be $360,700, earnings after tax will
total $23,400, and MP will pay $12,400 in dividends. What are the estimated retained
earnings at the end of next year? - Answers -$169,000
$158,000 + $23,400 - $12,400 = $169,000
Assume each month has 30 days and AmDocs has a 60-day accounts receivable
period. During the second calendar quarter of the year (April, May, and June), AmDocs
will collect payment for the sales it made during which months? - Answers -February,
March, and April
The Limited collects 25% of sales in the month of sale, 60% of sales in the month
following the month of sale, and 15% of sales in the second month following the month
of sale. During the month of April, the firm will collect:
