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  To ensure that the financial statements articulate, it is important that the projected change in the cash balance on the balance sheet each year agrees with a

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1. To ensure that the financial statements articulate, it is important that the projected change in the cash balance on the balance sheet each year agrees with
   
   a. the net change in working capital from period to period.
   b. the cash provided by or used by operations on the projected statement of cash flows.
   c. the cash collections from sales in the projected income statement.
   d. the net change in cash on the projected statement of cash flows.
2. In forecasting revenue, projecting changes in future selling prices for a firm's products depends on factors specific to the firm and its industry that might affect demand and price elasticity. Which of the following companies would most likely not be able to increase prices in the near future?
   a. A firm in a capital-intensive industry in which excess capacity exists.
   b. A firm operating in an industry that is transitioning from the introduction phase to the high-growth phase of its life cycle.
   c. A firm operating in an industry that is expected to maintain its current production processes.
   d. A firm in a capital-intensive industry that is expected to operate near capacity
3. If a company has very low operating leverage (i.e., a low proportion of fixed costs in the cost structure) and no changes are expected in operations, then
   a. using common-size income statement percentages can serve as a reasonable basis for projecting future operating expenses.
   b. using common-size income statement percentages will understate future projected operating expenses.
   c. rate of change income statement percentages can serve as a good basis for projecting operating expenses.
   d. using common-size income statement percentages will overstate future projected operating expenses.
4. Forecasting financial statements requires identifying financial flexibility in order to project how the firm will
   a. increase assets and earnings.
   b. balance future resources with future claims on resources.
   c. generate profitable growth and cash flows.
   d. All of these answer choices are correct.
5. As a firm progresses through the introduction stage of its life cycle, what type of financial flexible account will it be more likely to use to balance the balance sheet?
   a. Share repurchases
   b. Dividends
   c. Issued equity
   d. Property, plant & equipment
6. As a firm progresses through the maturity stage of its life cycle, what type of financial flexible account will it be more likely to use to balance the balance sheet?
   a. Share repurchases
   b. Issued debt
   c. Property, plant & equipment
   d. Issued equity
7. Card Sharks, Inc., maintains a cash balance equivalent to 30 days of sales. Sales in 20X1 amounted to $352,412 and the company expects growth in 20X2 of 33% and in 20X3 of 40%. Given the information provided, what is Card Sharks' 20X2 projected year-end cash balance?
   a. $28,965
   b. $38,524
   c. $15,623
   d. $96
8. Card Sharks, Inc., maintains a cash balance equivalent to 30 days of sales. Sales in 20X1 amounted to $352,412 and the company expects growth in 20X2 of 33% and in 20X3 of 40%. Given the information provided, what is Card Sharks' projected 2013 sales?
   a. $493,377
   b. $656,191
   c. $187,483
   d. $542,333
9. When projecting operating expenses, it is important to determine the mix of fixed and variable costs. One clue suggesting the presence of fixed costs in cost of goods sold is
   a. that the percentage increase in cost of goods sold in prior years is significantly greater than the percentage increase in sales.
   b. that the percentage increase in cost of goods sold in prior years is significantly less than the percentage increase in sales.
   c. low capital intensity in the production process.
   d. that the percentage increase in sales in prior years is significantly greater than the percentage increase in receivables.
10. Project year-end retained earnings for Construction Company for 20X3 based on the following facts:
    
    Retained earnings at 31 December 20X2: $126,000
    Other comprehensive income items in 20X3: $1,500
    Dividends declared in 20X3: $20,000
    Net loss for 20X3: ($78,000)
    Common shares issued in 20X3: $22,000
    No other equity transactions in 20X3
    a. $48,000
    b. $50,000
    c. $29,500
    d. $28,000