Filters
Question type
Study Flashcards

Which one of the following is the key driver of most financial plans?


A) Net income target.
B) Sales forecast.
C) Available net working capital.
D) Cost of goods sold.
E) Return on equity.

F) A) and D)
G) A) and E)

Correct Answer

verifed

verified

If a firm is to grow at its sustainable growth rate, its growth depends on which of the following factors?


A) Leverage and activity ratios.
B) Short-term solvency ratios.
C) The number of units sold.
D) Revenues, expenses, and profit margin,
E) Profit margin, financial policy and dividend policy.

F) C) and D)
G) C) and E)

Correct Answer

verifed

verified

The retention ratio is equal to one plus the dividend payout ratio.

A) True
B) False

Correct Answer

verifed

verified

A Toronto firm has current sales of $1,465,000 and is operating at 87% of its fixed asset capacity. How fast can the firm grow before any new fixed assets are needed?


A) 11.49%
B) 13.00 %
C) 14.94%
D) 15.07 %
E) 15.81 %

F) A) and B)
G) A) and C)

Correct Answer

verifed

verified

Financial planning:


A) Is limited to projecting activities of a firm for the next twelve months.
B) Formulates the way in which financial goals are to be achieved.
C) Is formulated based primarily on a net income assumption.
D) For capital acquisitions is done on a purely segregated basis.
E) Focuses solely on the assumptions that are most likely to occur.

F) B) and E)
G) B) and D)

Correct Answer

verifed

verified

The following balance sheet and income statement should be used: The following balance sheet and income statement should be used: Assume that all costs, assets, and current liabilities of Taylor, Inc. increase directly with sales. Also assume that the tax rate, the dividend payout ratio and profit margin ratio are constant. The firm is currently operating at full capacity. What is the external financing need if sales increase by 8 percent? A) -$123.92 B) -$12.87 C) -$9.20 D) $11.68 E) $108.14 The following balance sheet and income statement should be used: Assume that all costs, assets, and current liabilities of Taylor, Inc. increase directly with sales. Also assume that the tax rate, the dividend payout ratio and profit margin ratio are constant. The firm is currently operating at full capacity. What is the external financing need if sales increase by 8 percent? A) -$123.92 B) -$12.87 C) -$9.20 D) $11.68 E) $108.14 Assume that all costs, assets, and current liabilities of Taylor, Inc. increase directly with sales. Also assume that the tax rate, the dividend payout ratio and profit margin ratio are constant. The firm is currently operating at full capacity. What is the external financing need if sales increase by 8 percent?


A) -$123.92
B) -$12.87
C) -$9.20
D) $11.68
E) $108.14

F) B) and E)
G) A) and C)

Correct Answer

verifed

verified

Calculate net working capital turnover given the following data. Total fixed assets $200,000; long-term liabilities $55,000; total liabilities $80,000; total shareholders' equity $220,000; total sales $800,000.


A) 13.75
B) 12.67
C) 11.75
D) 10.67
E) 9.67

F) C) and D)
G) A) and D)

Correct Answer

verifed

verified

Calculate payout ratio given the following information: cash dividends paid = $35,525; sales = $900,000; cost of goods sold = $625,000; selling and administrative expenses = $100,000; interest expense = $30,000; tax rate= 30%.


A) 70%
B) 30%
C) 50%
D) 35%
E) 65%

F) C) and D)
G) B) and C)

Correct Answer

verifed

verified

Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 9% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 82% of capacity. What is the addition to retained earnings? A) $311 B) $385 C) $437 D) $475 E) $518 Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 9% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 82% of capacity. What is the addition to retained earnings? A) $311 B) $385 C) $437 D) $475 E) $518 Assets, accounts payable and costs are proportional to sales. Debt and equity are not. The sales of Douglass Enterprises are expected to increase by 9% next year. The debt-equity ratio and the dividend payout ratio are to be held constant. Currently the firm is producing at 82% of capacity. What is the addition to retained earnings?


A) $311
B) $385
C) $437
D) $475
E) $518

F) A) and D)
G) A) and E)

Correct Answer

verifed

verified

Calculate the sustainable growth rate given the following information: return on equity = 25%; payout ratio = 30%.


A) 21.21%
B) 22.32%
C) 23.43%
D) 24.54%
E) 25.65%

F) C) and E)
G) None of the above

Correct Answer

verifed

verified

Assume costs, assets, and accounts payable all increase at the same rate as sales. Also assume 80% of net income is paid out in dividends. If sales grow at 25%, compute external financing needed. A) $0.00 B) $4.50 C) $22.50 D) $29.50 E) $52.00 Assume costs, assets, and accounts payable all increase at the same rate as sales. Also assume 80% of net income is paid out in dividends. If sales grow at 25%, compute external financing needed.


A) $0.00
B) $4.50
C) $22.50
D) $29.50
E) $52.00

F) A) and E)
G) A) and B)

Correct Answer

verifed

verified

Calculate total current assets given the following information. Cash $10,000; supplies $3,000; average collection period 54.75 days; days' sales in inventory 91.25 days; sales $80,000; COGS $60,000.


A) $42,000
B) $40,000
C) $38,000
D) $36,000
E) $34,000

F) B) and D)
G) None of the above

Correct Answer

verifed

verified

Assume Marble is projecting a 20% increase in sales for the coming year, with current assets, all costs, and current liabilities proportional to sales. Long-term debt is not proportional to sales. If the firm's tax rate remains unchanged, the dividend payout is 40%, and Marble is operating at 70% of capacity, what is the external financing needed (EFN) for 2018 ($ in millions) ? A) EFN is negative B) $21.94 C) $48.31 D) $76.32 E) $89.85 Assume Marble is projecting a 20% increase in sales for the coming year, with current assets, all costs, and current liabilities proportional to sales. Long-term debt is not proportional to sales. If the firm's tax rate remains unchanged, the dividend payout is 40%, and Marble is operating at 70% of capacity, what is the external financing needed (EFN) for 2018 ($ in millions) ? A) EFN is negative B) $21.94 C) $48.31 D) $76.32 E) $89.85 Assume Marble is projecting a 20% increase in sales for the coming year, with current assets, all costs, and current liabilities proportional to sales. Long-term debt is not proportional to sales. If the firm's tax rate remains unchanged, the dividend payout is 40%, and Marble is operating at 70% of capacity, what is the external financing needed (EFN) for 2018 ($ in millions) ?


A) EFN is negative
B) $21.94
C) $48.31
D) $76.32
E) $89.85

F) A) and D)
G) A) and C)

Correct Answer

verifed

verified

When constructing a pro forma statement, net working capital generally varies:


A) Directly with sales.
B) With the level of capacity utilization.
C) Directly with the growth rate of fixed assets.
D) Based upon the financial leverage employed.
E) As necessary to get the balance sheet to balance.

F) A) and C)
G) A) and B)

Correct Answer

verifed

verified

Financial planning:


A) Encourages managers to separate their goals from their plans.
B) Is generally based solely on the best-case scenario.
C) Generally has been found ineffective.
D) Helps managers establish priorities.
E) Prevents firms from encountering surprise events.

F) A) and D)
G) B) and E)

Correct Answer

verifed

verified

In most industries, planning beyond the period of one year is not very useful.

A) True
B) False

Correct Answer

verifed

verified

A firm desires a sustainable growth rate of 13.3273% while maintaining a 30 percent dividend payout ratio and an 8% profit margin. The firm has a total asset turnover ratio of 1.5. What is the debt-equity ratio that is required to achieve the firm's desired rate of growth?


A) 28 %t
B) 35%
C) 40 %
D) 44%
E) 52%

F) All of the above
G) B) and C)

Correct Answer

verifed

verified

Assume costs and assets increase at the same rate as sales. Also assume 40% of net income is paid out in dividends, the current debt to equity ratio is optimal, and that no new equity sales are possible. Forecast the addition to retained earnings assuming the firm's sales increase at the maximum percent possible given these assumptions. A) $43.2 B) $88.5 C) $113.3 D) $146.7 E) $167.8 Assume costs and assets increase at the same rate as sales. Also assume 40% of net income is paid out in dividends, the current debt to equity ratio is optimal, and that no new equity sales are possible. Forecast the addition to retained earnings assuming the firm's sales increase at the maximum percent possible given these assumptions.


A) $43.2
B) $88.5
C) $113.3
D) $146.7
E) $167.8

F) C) and D)
G) A) and B)

Correct Answer

verifed

verified

Assuming that a company has a policy of paying out a constant fraction of net income in the form of a cash dividends, calculate the addition to retained earnings given the following information: cash dividends = $88; net income = $264.


A) $176
B) $245
C) $328
D) $402
E) $485

F) None of the above
G) B) and C)

Correct Answer

verifed

verified

Pro forma statements are a common element among financial planning models.

A) True
B) False

Correct Answer

verifed

verified

Showing 301 - 320 of 379

Related Exams

Exam 1

Introduction to Corporate Finance

256 Questions

Exam 2

Financial Statements, Cash Flow, and Taxes

412 Questions

Exam 3

Working With Financial Statements

408 Questions

Exam 5

Introduction to Valuation: the Time Value of Money

280 Questions

Exam 6

Discounted Cash Flow Valuation

413 Questions

Exam 7

Interest Rates and Bond Valuation

393 Questions

Exam 8

Stock Valuation

399 Questions

Exam 9

Net Present Value and Other Investment Criteria

415 Questions

Exam 10

Making Capital Investment Decisions

363 Questions

Exam 11

Project Analysis and Evaluation

425 Questions

Exam 12

Lessons From Capital Market History

329 Questions

Exam 13

Return, Risk, and the Security Market Line

416 Questions

Exam 14

Cost of Capital

377 Questions

Exam 15

Raising Capital

337 Questions

Exam 16

Financial Leverage and Capital Structure Policy

383 Questions

Exam 17

Dividends and Dividend Policy

376 Questions

Exam 18

Short-Term Finance and Planning

424 Questions

Exam 19

Cash and Liquidity Management

374 Questions

Exam 20

Credit and Inventory Management

384 Questions

Exam 21

International Corporate Finance

369 Questions

Exam 22

Leasing

269 Questions

Exam 23

Mergers and Acquisitions

335 Questions

Exam 24

Enterprise Risk Management

300 Questions

Exam 25

Options and Corporate Securities

445 Questions

Exam 26

Behavioural Finance: Implications for Financial Management

76 Questions

Show Answer