Ch. 4 Financial Forecasting – Flashcards

The importance of the pro forma income statement is to provide a projection of how much _____ is anticipated over the ensuing time period.

The primary considerations for cash payments are monthly costs associated with:

A company has sales of $1,000,000, cost of goods sold at 60% of sales, general and administrative expenses of $250,000, interest expenses of $25,000, and a tax rate of 40%. The firm's earnings after taxes is _____

1 2 3 4

The production plan is dependent upon the _____ projection

The inventory methods used most commonly for determining cost of goods sold include:

It is crucial that a firm ensure that adequate cash is available to _____

A firm that does not wish to borrow to meet anticipated sales growth may instead decide to:

The most comprehensive means of financial forecasting is to

A company anticipates monthly sales of $400,000 (i.e., per month in January, February, March, and April). Material costs represents 55% of sales and due to level production, material purchases will be equal for each month. Labor costs are expected to be $15,000 in January, $18,000 in February, $14,000 in March, and $19,000 in April. Fixed overhead is $10,000 per month. General and administrative expenses are $2,500 per month, an interest expense of $2,500 is paid in March, new equipment is purchased for $10,000 in February, and a dividend of $3,000 is paid in March. The company's total cash payments in March are _____

The difference between total cash receipts and total cash payments is referred to as

A firm using the FIFO inventory accounting method has beginning inventory of 300 units at a cost of $15 each. During the period the firm produced 700 units at a cost of $17 each. If the firm sold 800 units during the period, what is the value of the ending inventory.

A firm's operating is $50, 000, interest expense is $4,000, the tax rate is 35%, and common stock dividends are $2,500. Calculate the firm's earnings after taxes:

What is the inventory accounting method that first allocates the cost of current sales to goods manufactured during the period until current production is depleted, and then to beginning inventory?

The pro forma balance sheet is developed by integrating the information from the _____

The information used to prepare the pro forma balance sheet comes from the following:

A firm has total receipts of $16,000, $20,000, ; $18,000 and total payments of $12,000, $15,000, ; $12,500, in January, February, ; March, respectively. The firm's net cast flow for January is _____

The primary purpose of the _____ budget is to allow the firm to anticipate the need for outside funding at the end of each month.

Which of the following two methods provides a month-to-month breakdown of the data 1) systems approach 2) Percent of sales

a firm using fifo inventory accounting method has a beginning inventory of 300 units at a cost of $15 each. During the period the firm produced 700 units at a cost of $17 each. If the firm sold 800 units during the period, the cost of goods sold is _____

A company that has the ability to increase sales with its current plant and equipment is said to be

The firm projects at 500,000 units and requires an ending inventory of 25,000 units. If the firm's beginning inventory is 50,000 units, what is the firm's production requirement for the period.

A company has forecasted sales of $50,000 in January, $40,000 in February, and $60,000 in March. All sales are on credit with 50% collected in the month of the sale, 30% collected in the month following the sale, and the remaining amount collected in the second month after the sale. What will the accounts receivable balance be after collections are made in the month of March.

What is the inventory accounting method for inventory that first allocates the cost of current sales to beginning inventory and then to goods manufactured during the period?

Which of the following is more likely to need to raise additional long-term capital to support its anticipated sales growth?

The _____ method assumes that accounts on the balance sheet will maintain a given percentage relationship to sales

Financial forecasting is essential to the strategic _____ of the firm.

A firm determines that sales will rise from $500,000 to $750,000 next year. The relationship of variable assets to sales is 50% and the relationship of variable liabilities to sales is 20%. The firm has a 10% profit margin and a dividend payout ratio of 30%. What is the level of new funds required?

The difference between total cash receipts and total cash payments is referred to as

A firm operating at full capacity will require a _____ level of new funds than a firm operating at less than full capacity

A firm anticipates a 30% growth in sales this coming year, Last year the firm had the following figures expressed as a percentage of sales: cash at 10%, accounts receivable at 25%, and inventory at 20%. Using the percentage-of-sales forecasting method, what percentage growth in current liabilities is needed to sustain the growth in sales?

A firm anticipates cash receipts for February of $20k and for March of $30k. Cash payments are expected to be $5k in February and $7k in March. The cash balance at the beginning of February was $6k, which is the level the firm wishes to maintain, At the beginning of February, the firm has a $21k loan balance on a line of credit with a local bank. Based on cash budget, how much can the firm repay in February and March?

The firm projects at 500,000 units and requires an ending inventory of 25,000 units. If the firm's beginning inventory is 50,000 units, what is the firm's production requirement for the period.