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Homework answers / question archive / 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

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

Finance

  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 collections from sales in the projected income statement.
    c. the cash provided by or used by operations on the projected statement of cash flows.
    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 operating in an industry that is expected to maintain its current production processes.
    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 in a capital-intensive industry that is expected to operate near capacity.
    d. A firm in a capital-intensive industry in which excess capacity exists.
  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. rate of change income statement percentages can serve as a good basis for projecting operating expenses.
    b. using common-size income statement percentages will understate future projected operating expenses.
    c. using common-size income statement percentages can serve as a reasonable basis for projecting future 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. Issued equity
    c. Property, plant & equipment
    d. Dividends
  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. Issued equity
    d. Property, plant & equipment
  7. 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. low capital intensity in the production process.
    c. that the percentage increase in cost of goods sold in prior years is significantly less than the percentage increase in sales.
    d. that the percentage increase in sales in prior years is significantly greater than the percentage increase in receivables.
  8. Forecast the operating items
  9. Forecast many items as a percentage of sales:
  10. Forecast depreciation as a percent of

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