Cristian Quintanilla
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Quiz on Chapter 15 - Financial Planning, Forecasting and Cash Budgets, created by Cristian Quintanilla on 28/09/2015.

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Cristian Quintanilla
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Chapter 15 - Financial Planning, Forecasting and Cash Budgets

Question 1 of 28

1

The strategic financial plans are planned long-term financial actions and the anticipated financial impact of those actions.

Select one of the following:

  • True
  • False

Explanation

Question 2 of 28

1

If the net cash flow is less than the minimum cash balance, financing is required

Select one of the following:

  • True
  • False

Explanation

Question 3 of 28

1

Cash planning involves the preparation of the firm's income statement

Select one of the following:

  • True
  • False

Explanation

Question 4 of 28

1

A positive external funds requirement would indicate that the firm's financing is in excess of its needs and that funds would therefore be available for repaying debt, repurchasing stock, or increasing the dividend to stockholders.

Select one of the following:

  • True
  • False

Explanation

Question 5 of 28

1

The sales forecast, cash budget, and pro forma financial statements are the key outputs of the short-run (operating) financial plan

Select one of the following:

  • True
  • False

Explanation

Question 6 of 28

1

The excess cash balance is the amount available for investment by the firm if the desired minimum cash balance is less than the period's ending cash.

Select one of the following:

  • True
  • False

Explanation

Question 7 of 28

1

The "plug" figure that is used as a balancing account in the pro forma balance sheet is retained earnings

Select one of the following:

  • True
  • False

Explanation

Question 8 of 28

1

The pro forma statements provide the financial manager with the amount of external financing required to support a given level of sales as well as a basis for analyzing in advance the level of profitability and overall financial performance of the firm in the coming year

Select one of the following:

  • True
  • False

Explanation

Question 9 of 28

1

The cash budget gives the financial manager a clear view of the timing of the firm's expected profitability over a given period

Select one of the following:

  • True
  • False

Explanation

Question 10 of 28

1

A firm's net cash flow is the mathematical difference between the firm's beginning cash and its cash disbursements in each period

Select one of the following:

  • True
  • False

Explanation

Question 11 of 28

1

The financial planning process begins with short-run plans and budgets that in turn guide the formulation of long-run financial plans

Select one of the following:

  • True
  • False

Explanation

Question 12 of 28

1

A typical sales forecast, though concerned with future events, will usually be based on recent historical trends and events as well as on forecasts of economic prospects

Select one of the following:

  • True
  • False

Explanation

Question 13 of 28

1

Pro forma financial statements are used primarily to assess a firm's historical performance

Select one of the following:

  • True
  • False

Explanation

Question 14 of 28

1

Any firm with a positive growth rate in sales will require some amount of external funding, assuming all existing ratios are to be maintained

Select one of the following:

  • True
  • False

Explanation

Question 15 of 28

1

An increase in the firm's inventory balance will normally require additional financing, unless the increase is matched by an equally large decrease in some other assets account

Select one of the following:

  • True
  • False

Explanation

Question 16 of 28

1

The financial planning process begins with __________ financial plans that in turn guide the formation of __________ plans and budgets

Select one of the following:

  • long-run; operating

  • strategic; operating

  • short-run; long-run

  • long-run; short-run

Explanation

Question 17 of 28

1

The key aspects of the financial planning process are:

Select one of the following:

  • investment planning and profit planning

  • cash planning and financing

  • cash planning and investment planning

  • cash planning and profit planning

Explanation

Question 18 of 28

1

Pro form statements are used for:

Select one of the following:

  • profit planning

  • credit analysis

  • cash budgeting

  • all of the above

Explanation

Question 19 of 28

1

Which of the following would be the lease likely to utilize pro forma financial statements or a cash budget?

Select one of the following:

  • top management

  • middle management

  • investors

  • lenders

Explanation

Question 20 of 28

1

The __________ is a financial projection of the firm's short-term cash surpluses or shortages

Select one of the following:

  • operating plan

  • cash budget

  • strategic plan

  • pro forma income statement

Explanation

Question 21 of 28

1

__________ forecast is based on the relationships between the firm's sales and certain economic indicatiors

Select one of the following:

  • A sales

  • An internail

  • A pro forma

  • An external

Explanation

Question 22 of 28

1

Key inputs to short-term financial planning are:

Select one of the following:

  • leverage analysis

  • economic forecasts

  • sales forecasts, operating, and financial data

  • financial budgets

Explanation

Question 23 of 28

1

Of the following, generally, the easiest to estimate are:

Select one of the following:

  • cash sales

  • cash disburesments

  • cash receipts

  • short-term borrowings

Explanation

Question 24 of 28

1

The percent-of-sales method of preparing the pro forma income statement assumes that all costs are:

Select one of the following:

  • fixed

  • independent

  • constant

  • variable

Explanation

Question 25 of 28

1

___________ generally reflects the anticipated financial impact of long-term actions

Select one of the following:

  • an operating financial plan

  • a strategic financial plan

  • a pro forma income statement

  • a cash budget

Explanation

Question 26 of 28

1

The primary purpose in preparing a budget is:

Select one of the following:

  • for profit planning

  • for risk analysis

  • to estimate sales

  • for cash planning

Explanation

Question 27 of 28

1

All of the following accounts are used in the preparation of the cash budget, EXCEPT:

Select one of the following:

  • cash receipts

  • depreciation

  • cash disbursements

  • excess cash

Explanation

Question 28 of 28

1

Holding other things constant, the additional funds required for financing the firm's operations would be reduced with an increase in the firm's

Select one of the following:

  • dividend ration payout

  • profit margin

  • capital intensity ration

  • tax rate

Explanation

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