FIN Module 3 Assignment Study Guide
Questions and Correct Answers
1). 1. the goal of the financial manager is to maximize the value of the shareholder's stake in
the firm
Ans: *A. True*
B. False
2). 2. if a firm is planning an expansion or changes in how it manages its inventory, long term
financial planning can help determine the impact on the firm's _______.
Ans: A. Debt financing
B. Capital investment
C. Free cash flow
*D. All of the above*
3). 3. building a model for long-term forecasting reveals points in the future where the firm will
need ______ when retained earnings are not enough to fund planned future investments
Ans: *A. External financing*
B. Stock dividends
C. Dividend payments
D. Mergers
4). 4. building a model for long-term forecasting reveals points in the future where the firm will
have ______.
Ans: A. Excess cash that can be used for dividends, debt repayment, or stock
repurchases.
B. Cash needs that must be funded with external financing.
C. A need for expanding property, plant and equipment to meet increases in capacity
*D. All of the above*
5). 5. forecasting a balance sheet with percent of sales method requires at least two passes - a
first pass to determine financing needs and a second pass that shows the sources and
amounts of financing
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, Ans: *A. True*
B. False
6). 6. the ________ method assumes that as sales grow, many income statement and balance
sheet items will grow, remaining the same percent of sales.
Ans: A. Percent of income
B. Percent of liabilities
*C. Percent of sales*
D. Percent of assets
7). 7. while the assets and accounts payable of a firm may reasonably be expected to grow
with sales, _______ will not naturally grow with sales.
Ans: A. Cash
B. Supplier credit
*C. Long term debt*
D. Cost of sales
8). 8. the amount of dividends a company pays will affect the _______ it has to finance future
growth.
Ans: A. Debt
*B. Retained earnings*
C. Current liabilities
D. Current ratio
9). 9. a firm's additional funds needed (afn) must come from external sources. typical sources
include short-term bank loans, long-term bonds, and common stock
Ans: *A. True*
B. False
10). 10. f. marston, inc. has developed a forecasting model to estimate its afn for the upcoming
year. all else being equal, which of the following factors is most likely to lead to an increase
of the additional funds needed (afn)?
Ans: A. A switch to a just-in-time inventory system and outsourcing production.
B. The company reduces its dividend payout ratio.
C. The company discovers that it has excess capacity in its fixed assets.
*D. A sharp increase in its forecasted sales*
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Questions and Correct Answers
1). 1. the goal of the financial manager is to maximize the value of the shareholder's stake in
the firm
Ans: *A. True*
B. False
2). 2. if a firm is planning an expansion or changes in how it manages its inventory, long term
financial planning can help determine the impact on the firm's _______.
Ans: A. Debt financing
B. Capital investment
C. Free cash flow
*D. All of the above*
3). 3. building a model for long-term forecasting reveals points in the future where the firm will
need ______ when retained earnings are not enough to fund planned future investments
Ans: *A. External financing*
B. Stock dividends
C. Dividend payments
D. Mergers
4). 4. building a model for long-term forecasting reveals points in the future where the firm will
have ______.
Ans: A. Excess cash that can be used for dividends, debt repayment, or stock
repurchases.
B. Cash needs that must be funded with external financing.
C. A need for expanding property, plant and equipment to meet increases in capacity
*D. All of the above*
5). 5. forecasting a balance sheet with percent of sales method requires at least two passes - a
first pass to determine financing needs and a second pass that shows the sources and
amounts of financing
PaperStoc.com Page 1 of 5
, Ans: *A. True*
B. False
6). 6. the ________ method assumes that as sales grow, many income statement and balance
sheet items will grow, remaining the same percent of sales.
Ans: A. Percent of income
B. Percent of liabilities
*C. Percent of sales*
D. Percent of assets
7). 7. while the assets and accounts payable of a firm may reasonably be expected to grow
with sales, _______ will not naturally grow with sales.
Ans: A. Cash
B. Supplier credit
*C. Long term debt*
D. Cost of sales
8). 8. the amount of dividends a company pays will affect the _______ it has to finance future
growth.
Ans: A. Debt
*B. Retained earnings*
C. Current liabilities
D. Current ratio
9). 9. a firm's additional funds needed (afn) must come from external sources. typical sources
include short-term bank loans, long-term bonds, and common stock
Ans: *A. True*
B. False
10). 10. f. marston, inc. has developed a forecasting model to estimate its afn for the upcoming
year. all else being equal, which of the following factors is most likely to lead to an increase
of the additional funds needed (afn)?
Ans: A. A switch to a just-in-time inventory system and outsourcing production.
B. The company reduces its dividend payout ratio.
C. The company discovers that it has excess capacity in its fixed assets.
*D. A sharp increase in its forecasted sales*
PaperStoc.com Page 2 of 5
