The objective of forecasting is to develop: Financial statement forecasts rely on additivity within financial statements and articulation across financial statements

1. The objective of forecasting is to develop:

a set of realistic expectations for future value-relevant payoffs.

2. Financial statement forecasts rely on additivity within financial statements and articulation across financial statements. Given this information forecasts of future growth in inventory will most likely affect growth in:

accounts payable.

3. When projecting operating expenses, it is important to determine the mix of fixed and variable costs; one clue suggesting the presence of fixed costs is:

the percentage change in cost of goods sold in prior years is significantly less than the percentage change in sales.

4. Common-size financial statements recast each statement item as:

a percentage of some "base number" on the financial statement in question.

5. All of the following are the fundamental bases for future payoffs to equity shareholders and share value except:

depreciation

6. Projected financial statements can be used to assess the sensitivity of all of the following except:

unusual patterns for projected total assets.

7. Financial statement forecasts are important analysis tools because forecasts of _____ play a central role in valuation and many other financial decision contexts.

Future Payoffs

8. It may be difficult to forecast sales for firms with ____ patterns because their historical growth rates reflect wide variations in both direction and amount from year to year.

Cyclical sales

9. The formula for forecasting inventory as a standalone item is

COGS/Inventory Turnover Ratio

10. Expected future payoffs can be measured in terms of:

Dividends, CFs, and Earnings