Principles of Finance Exam 2 – UARK |
Questions and Answers
A firm's P/E ratio tends to be higher if ________. - -Its risk is lower and its
growth prospects are higher
- The three basic ratios used in the DuPont system of analysis are ________. -
-net profit margin, total asset turnover, and financial leverage multiplier
- T/F? A financial planning process begins with short-term, or operating,
plans and budgets that in turn guide the formulation of long-term, or
strategic, financial plans. - -False
- Key inputs to short-term financial planning are ________. - -sales forecasts,
and operating and financial data
- Given a financial manager's preference for faster receipt of cash flows,
________. - -a shorter depreciable life is preferred to a longer one
- Which of the following is a cash inflow? - -decrease in accounts receivable
- T/F? A firm's free cash flow (FCF) represents the amount of cash flow
available to investors (stockholders and bondholders) after the firm has met
all operating needs and after having paid for net fixed asset investments and
net current asset investments. - -True
- Cash disbursements include ________. - -rent payments
- A firm has projected sales in May, June, and July of $100, $200, and $300,
respectively. The firm makes 20 percent of sales for cash and collects the
balance one month following the sale. The firm's total cash receipts in July is
________. - -$220
- In October, a firm had an ending cash balance of $35,000. In November,
the firm had a net cash flow of $40,000. The minimum cash balance required
by the firm is $25,000. At the end of November, the firm had ________. - -An
excess cash balance of $50,000
- The percent-of-sales method of developing a pro forma income statement
forecasts sales and other line items as a ________. - -percentage of projected
sales
- The best way to adjust for the presence of fixed costs when preparing a
pro forma income statement is ________. - -to break the firm's historical costs
into fixed and variable components
Questions and Answers
A firm's P/E ratio tends to be higher if ________. - -Its risk is lower and its
growth prospects are higher
- The three basic ratios used in the DuPont system of analysis are ________. -
-net profit margin, total asset turnover, and financial leverage multiplier
- T/F? A financial planning process begins with short-term, or operating,
plans and budgets that in turn guide the formulation of long-term, or
strategic, financial plans. - -False
- Key inputs to short-term financial planning are ________. - -sales forecasts,
and operating and financial data
- Given a financial manager's preference for faster receipt of cash flows,
________. - -a shorter depreciable life is preferred to a longer one
- Which of the following is a cash inflow? - -decrease in accounts receivable
- T/F? A firm's free cash flow (FCF) represents the amount of cash flow
available to investors (stockholders and bondholders) after the firm has met
all operating needs and after having paid for net fixed asset investments and
net current asset investments. - -True
- Cash disbursements include ________. - -rent payments
- A firm has projected sales in May, June, and July of $100, $200, and $300,
respectively. The firm makes 20 percent of sales for cash and collects the
balance one month following the sale. The firm's total cash receipts in July is
________. - -$220
- In October, a firm had an ending cash balance of $35,000. In November,
the firm had a net cash flow of $40,000. The minimum cash balance required
by the firm is $25,000. At the end of November, the firm had ________. - -An
excess cash balance of $50,000
- The percent-of-sales method of developing a pro forma income statement
forecasts sales and other line items as a ________. - -percentage of projected
sales
- The best way to adjust for the presence of fixed costs when preparing a
pro forma income statement is ________. - -to break the firm's historical costs
into fixed and variable components
