Finance Chapter 4, FIN Chapter 3, Ch.
2, FinExam1 Latest Update
Phil is working on a finaicial plan for the next three years. This period is referred to as
which one of the following - ANSWER Planning horizon
Atlas industries combines the smaller investment proposals from each operational unit
into a single project for planning purposes. This process is reffered to as which one if
the following - ANSWER Aggregation
Which one of the following terms is applied to the financial planning method which uses
the projected sales level as the basis for determining changes in balance sheet and
income statement account values - ANSWER Percentage of sales method
Which of the following terms is defined as dividends paid expressed as a percentage of
net income - ANSWER Dividend payout ratio
Which of the following correctly defines the retention ratio - ANSWER Addition. To
retained earnings divided by net income
Which one of the following ratios identifies the amount of assets a firm needs in order to
generate $1 in sales - ANSWER Capital intensity ratio
The internal growth rate of a firm is best described as the - ANSWER Maximum growth
rate achievable excluding external financing of any kind
The sustainable growth rate of a firm is best described as the - ANSWER Maximum
growth rate achievable excluding any external equity financing while maintaining a
constant debt equity ratio
Financial planning - ANSWER Considers multiple options and scenarios for the next two
to five years
Which one of the following statements concerning financial planning for a firm is correct
- ANSWER Financial plans often contain alternative options based on economic
developments
,You are getting ready to prepare pro forma statements for your business. Which one of
the following are you most apt to estimate first as you begin this process - ANSWER
Sales forecast
Which of the following is correct - ANSWER Pro forma statements are projections, not
guarantees
When utilizing the percentage of sales approach, managers - ANSWER Consider the
current production capacity level, can project both net income and net cash flows
Which of the following is correct in relation to the pro forma statements - ANSWER
Inventory changes are directly proportional to sales changes
When constructing a pro forms statement net working capital generally - ANSWER
Varies proportionally with sales
A pro forma statement indicates that both sales and fixed assets are projected to
increase by 7 percent over their current levels. Given this, you can safely assume that
the firm - ANSWER Is currently operating at full capacity
Which of the following policies most directly affect the projection of the retained
earnings balance to be used on a pro forma statements - ANSWER Dividend policy
A firm is operating at 90 percent of capacity. This information is primarily needed to
project which one of the following accounts values when compiling pro forma
statements - ANSWER Fixed assets
Activities of a firm which require the spending of cash are known as:
A. sources of cash.
B. uses of cash.
C. cash collections.
D. cash receipts.
E. cash on hand. - ANSWER B) uses of cash.
The sources and uses of cash over a stated period of time are reflected on the:
A. income statement.
B. balance sheet.
,C. tax reconciliation statement.
D. statement of cash flows.
E. statement of operating position. - ANSWER D) statement of cash flows.
A common-size income statement is an accounting statement that expresses all of a
firm's expenses as percentage of:
A. total assets.
B. total equity.
C. net income.
D. taxable income.
E. sales. - ANSWER E) sales.
Which one of the following standardizes items on the income statement and balance
sheet relative to their values as of a chosen point in time?
A. statement of standardization
B. statement of cash flows
C. common-base year statement
D. common-size statement
E. base reconciliation statement - ANSWER C) common-base year statement
Relationships determined from a firm's financial information and used for comparison
purposes are known as:
A. financial ratios.
B. identities.
C. dimensional analysis.
D. scenario analysis.
E. solvency analysis. - ANSWER A) financial ratios.
, The formula which breaks down the return on equity into three component parts is
referred to as which one of the following?
A. equity equation
B. profitability determinant
C. SIC formula
D. Du Pont identity
E. equity performance formula - ANSWER D) Du Pont identity
The U.S. government coding system that classifies a firm by the nature of its business
operations is known as the:
A. NASDAQ 100.
B. Standard & Poor's 500.
C. Standard Industrial Classification code.
D. Governmental ID code.
E. Government Engineered Coding System. - ANSWER C) Standard Industrial
Classification code.
Which one of the following is a source of cash?
A. increase in accounts receivable
B. decrease in notes payable
C. decrease in common stock
D. increase in accounts payable
E. increase in inventory - ANSWER D) increase in accounts payable
Which one of the following is a source of cash for a non-tax-paying firm?
A. Increase in accounts receivable.
B. Increase in depreciation.
2, FinExam1 Latest Update
Phil is working on a finaicial plan for the next three years. This period is referred to as
which one of the following - ANSWER Planning horizon
Atlas industries combines the smaller investment proposals from each operational unit
into a single project for planning purposes. This process is reffered to as which one if
the following - ANSWER Aggregation
Which one of the following terms is applied to the financial planning method which uses
the projected sales level as the basis for determining changes in balance sheet and
income statement account values - ANSWER Percentage of sales method
Which of the following terms is defined as dividends paid expressed as a percentage of
net income - ANSWER Dividend payout ratio
Which of the following correctly defines the retention ratio - ANSWER Addition. To
retained earnings divided by net income
Which one of the following ratios identifies the amount of assets a firm needs in order to
generate $1 in sales - ANSWER Capital intensity ratio
The internal growth rate of a firm is best described as the - ANSWER Maximum growth
rate achievable excluding external financing of any kind
The sustainable growth rate of a firm is best described as the - ANSWER Maximum
growth rate achievable excluding any external equity financing while maintaining a
constant debt equity ratio
Financial planning - ANSWER Considers multiple options and scenarios for the next two
to five years
Which one of the following statements concerning financial planning for a firm is correct
- ANSWER Financial plans often contain alternative options based on economic
developments
,You are getting ready to prepare pro forma statements for your business. Which one of
the following are you most apt to estimate first as you begin this process - ANSWER
Sales forecast
Which of the following is correct - ANSWER Pro forma statements are projections, not
guarantees
When utilizing the percentage of sales approach, managers - ANSWER Consider the
current production capacity level, can project both net income and net cash flows
Which of the following is correct in relation to the pro forma statements - ANSWER
Inventory changes are directly proportional to sales changes
When constructing a pro forms statement net working capital generally - ANSWER
Varies proportionally with sales
A pro forma statement indicates that both sales and fixed assets are projected to
increase by 7 percent over their current levels. Given this, you can safely assume that
the firm - ANSWER Is currently operating at full capacity
Which of the following policies most directly affect the projection of the retained
earnings balance to be used on a pro forma statements - ANSWER Dividend policy
A firm is operating at 90 percent of capacity. This information is primarily needed to
project which one of the following accounts values when compiling pro forma
statements - ANSWER Fixed assets
Activities of a firm which require the spending of cash are known as:
A. sources of cash.
B. uses of cash.
C. cash collections.
D. cash receipts.
E. cash on hand. - ANSWER B) uses of cash.
The sources and uses of cash over a stated period of time are reflected on the:
A. income statement.
B. balance sheet.
,C. tax reconciliation statement.
D. statement of cash flows.
E. statement of operating position. - ANSWER D) statement of cash flows.
A common-size income statement is an accounting statement that expresses all of a
firm's expenses as percentage of:
A. total assets.
B. total equity.
C. net income.
D. taxable income.
E. sales. - ANSWER E) sales.
Which one of the following standardizes items on the income statement and balance
sheet relative to their values as of a chosen point in time?
A. statement of standardization
B. statement of cash flows
C. common-base year statement
D. common-size statement
E. base reconciliation statement - ANSWER C) common-base year statement
Relationships determined from a firm's financial information and used for comparison
purposes are known as:
A. financial ratios.
B. identities.
C. dimensional analysis.
D. scenario analysis.
E. solvency analysis. - ANSWER A) financial ratios.
, The formula which breaks down the return on equity into three component parts is
referred to as which one of the following?
A. equity equation
B. profitability determinant
C. SIC formula
D. Du Pont identity
E. equity performance formula - ANSWER D) Du Pont identity
The U.S. government coding system that classifies a firm by the nature of its business
operations is known as the:
A. NASDAQ 100.
B. Standard & Poor's 500.
C. Standard Industrial Classification code.
D. Governmental ID code.
E. Government Engineered Coding System. - ANSWER C) Standard Industrial
Classification code.
Which one of the following is a source of cash?
A. increase in accounts receivable
B. decrease in notes payable
C. decrease in common stock
D. increase in accounts payable
E. increase in inventory - ANSWER D) increase in accounts payable
Which one of the following is a source of cash for a non-tax-paying firm?
A. Increase in accounts receivable.
B. Increase in depreciation.
