FIN 300 exam 2 Question and answers
100% correct 2025
The balancing problem in forecasting refers to which of the following? - correct
answer ✔the cost of new debt and its impact on forecasting retained earnings
Which of the following items on the income statement and balance sheet is
most likely to vary spontaneously with sales? - correct answer ✔notes
payable
Additional funds needed represents: - correct answer ✔the amount to be
borrowed
Sales will grow from $100,000 this year to $150,000 next year. Preferred
dividends were $10,000 this year. What is the new projected amount of
preferred dividends? - correct answer ✔$ 10,000
Which of the following items on the income statement and balance sheet is
least likely vary spontaneously with sales? - correct answer ✔plant and
equipment
Each of the following items on the income statement and balance sheet tend
to vary spontaneously with sales except? - correct answer ✔accumulated
depreciation
A financial plan consisting of projected future financial statements are called:
Hint: "In the form of" is the key here! - correct answer ✔pro forma financial
statements.
,Which of the following does not represent a financial plan?
Hint: A financial plan looks ahead. - correct answer ✔A balance sheet
Which one of the following is not a method of forecasting future business
activity? - correct answer ✔Analysis of last year's financial statements
Which of the following pro forma statements is likely to be calculated first by
the financial manager who is creating next year's financial plan?
Hint: Where is the primary "independent" variable for the plan found? - correct
answer ✔Income statement
Which of the following income statement accounts is not likely to vary with
sales?
Hint: Which of the following is a function of something other than sales? -
correct answer ✔Depreciation expense
Which of the following balance sheet accounts is not likely to vary directly with
changes in sales?
Hint: Which of the following is affected least by sales? - correct answer
✔Long-term debt
In the pro forma balance sheet, which of the following is normally the "plug"
number inserted to "balance" the balance sheet? - correct answer
✔Additional funds needed
, Amex Corporation forecasts a 15% increase in sales, and similar effects for its
accounts receivable ($3 million), inventory ($4 million), and accounts payable
($3.5 million). All other financial statement accounts will remain the same, and
Amex will pay out all earnings to shareholders as dividends. What is Amex's
expected additional funds needed?
Hint: Estimate the changes in net working capital? - correct answer
✔$525,000
. Jones Corp. expects sales to increase 10% from this year's level of $5
million. With a net profit margin of 8% and a dividend payout ratio of 30%,
what financing for next year might be provided from internal equity sources?
Hint: What added funds will be provided from added retained earnings? -
correct answer ✔$308,000
A company with rapidly growing sales is likely to experience - correct answer
✔A great need for additional funding from outside the firm
When we compare the risk of two investments that have the same expected
return, the coefficient of variation: - correct answer ✔provides no additional
information than the standard deviation
What is the coefficient of variation of the following income statement sales
projection given the following information?
Possible Sales Level (in 000's) Probability
1000 10%
2000 15%
100% correct 2025
The balancing problem in forecasting refers to which of the following? - correct
answer ✔the cost of new debt and its impact on forecasting retained earnings
Which of the following items on the income statement and balance sheet is
most likely to vary spontaneously with sales? - correct answer ✔notes
payable
Additional funds needed represents: - correct answer ✔the amount to be
borrowed
Sales will grow from $100,000 this year to $150,000 next year. Preferred
dividends were $10,000 this year. What is the new projected amount of
preferred dividends? - correct answer ✔$ 10,000
Which of the following items on the income statement and balance sheet is
least likely vary spontaneously with sales? - correct answer ✔plant and
equipment
Each of the following items on the income statement and balance sheet tend
to vary spontaneously with sales except? - correct answer ✔accumulated
depreciation
A financial plan consisting of projected future financial statements are called:
Hint: "In the form of" is the key here! - correct answer ✔pro forma financial
statements.
,Which of the following does not represent a financial plan?
Hint: A financial plan looks ahead. - correct answer ✔A balance sheet
Which one of the following is not a method of forecasting future business
activity? - correct answer ✔Analysis of last year's financial statements
Which of the following pro forma statements is likely to be calculated first by
the financial manager who is creating next year's financial plan?
Hint: Where is the primary "independent" variable for the plan found? - correct
answer ✔Income statement
Which of the following income statement accounts is not likely to vary with
sales?
Hint: Which of the following is a function of something other than sales? -
correct answer ✔Depreciation expense
Which of the following balance sheet accounts is not likely to vary directly with
changes in sales?
Hint: Which of the following is affected least by sales? - correct answer
✔Long-term debt
In the pro forma balance sheet, which of the following is normally the "plug"
number inserted to "balance" the balance sheet? - correct answer
✔Additional funds needed
, Amex Corporation forecasts a 15% increase in sales, and similar effects for its
accounts receivable ($3 million), inventory ($4 million), and accounts payable
($3.5 million). All other financial statement accounts will remain the same, and
Amex will pay out all earnings to shareholders as dividends. What is Amex's
expected additional funds needed?
Hint: Estimate the changes in net working capital? - correct answer
✔$525,000
. Jones Corp. expects sales to increase 10% from this year's level of $5
million. With a net profit margin of 8% and a dividend payout ratio of 30%,
what financing for next year might be provided from internal equity sources?
Hint: What added funds will be provided from added retained earnings? -
correct answer ✔$308,000
A company with rapidly growing sales is likely to experience - correct answer
✔A great need for additional funding from outside the firm
When we compare the risk of two investments that have the same expected
return, the coefficient of variation: - correct answer ✔provides no additional
information than the standard deviation
What is the coefficient of variation of the following income statement sales
projection given the following information?
Possible Sales Level (in 000's) Probability
1000 10%
2000 15%
