Leach TB Chap06 Ed3

Leach TB Chap06 Ed3 - CHAPTER 6 FINANCIAL PLANNING: SHORT...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 6 FINANCIAL PLANNING: SHORT TERM AND LONG TERM True-False Questions T. 1. The weighted average of a set of possible outcomes or scenarios is known as expected values. T. 2. The rate at which a firm can grow sales based on the retention of business profits is known as sustainable sales growth rate. F. 3. The constant ratio forecasting method makes projections based on the assumption that certain costs and some balance sheet items are best expressed as a percentage of sales. F. 4. The percent of sales forecasting method projects selected cost and balance items at the same growth rate as sales. T. 5. The cost of obtaining additional funds, such as additional interest expenses from borrowing funds, may be explicit and impact AFN. F. 6. The added costs associated with obtaining equity capital are based on investor expected rates of return and are explicit costs which affect AFN. F. 7. Short-term financial planning typically involves preparing monthly financial statements and focuses on identifying and planning for net income demands on the business. T. 8. Even in a young, successful venture, restricted access to bank credit and with little to no access to short-term lending markets can hinder operations until the next round of financing. F. 9. A firm with a positive growth rate in sales will require some additional funds, assuming the existing ratios will not be changed. T. 10. An increase in accounts receivable will require additional financing unless the increase is offset by an equal decrease in another asset account. T. 11. The actions of screening business ideas, preparing a business plan, and obtaining seed financing occurs during a venture’s development stage. T. 12. Short-term cash planning tools include preparation of a: sales schedule, a purchases schedule, a wages and commissions schedule, and a cash budget. 38
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 6: Financial Planning: Short Term and Long Term F. 13. A cash budget shows a venture’s projected revenues and expenses over a forecast period. T. 14. Forecasting for firms with operating histories is generally much easier than forecasting for early-stage ventures. T. 15. An expected value is a weighted average of a set of scenarios or possible outcomes. F. 16. A “cash budget” is a firm’s projected sales and expenditures over a forecast period. F. 17. Sales forecasting accuracy is usually highest during a venture’s startup stage in its life cycle. F. 18. “Public or seasoned financing” typically occurs during the survival stage of a venture’s life cycle. T. 19. Sales forecasting accuracy is usually lowest during a venture’s development stage in its life cycle. T. 20. A “sustainable sales growth rate” is the rate at which a firm can grow sales based on the retention of profits in the business. F.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/05/2009 for the course FIN Fin 595 taught by Professor Shabbir during the Spring '09 term at CSU Dominguez Hills.

Page1 / 8

Leach TB Chap06 Ed3 - CHAPTER 6 FINANCIAL PLANNING: SHORT...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online