13 x11 Financial Management A

13 x11 Financial - FinancialManagement(A.FinancialPlanning&Strategies MODULE 11 FINANCIAL MANAGEMENT A FINANCIAL PLANNING AND STRATEGIES THEORIES

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Financial Management MODULE 11 FINANCIAL MANAGEMENT A. FINANCIAL PLANNING AND STRATEGIES THEORIES: Business plan 3. The typical outline of the component parts of a business plan would be the A. mission and strategy statements. C. financial projections. B. operations of the business. D. All of the above. Financial planning process 2. Planning for future growth is called: A. capital budgeting C. financial forecasting B. working capital management D. none of the above 1. The ideal financial planning process would be A. top-down planning. B. bottom-up planning. C. a combination of top-down and bottom-up planning. D. none of the above. 18. Which of the following is incorrect regarding the construction of financial planning models? A. There is no theory or model that leads straight to the optimal financial strategy. B. Financial planning should not proceed by trial and error. C. Many different strategies may be projected under a range of assumptions about the future before one strategy is finally chosen. D. The dozens of separate projections that may be made during this trial- and-error process generate a heavy load of arithmetic and paperwork. Financing policy Maturities matching 23. When a firm finances long-term assets with short-term sources of funding, it: A. reduces the risk of cash shortage B. will have higher interest expenses C. improves the leverage ratio D. is ignoring the principle of matched maturities Short-term financing 14. The type of company most likely to need short-term financing is one that A. has no seasonality and no growth in sales from year to year B. sells only for cash C. has a high degree of seasonality D. has lower total fixed costs than total variable costs 25. Common sources of short-term financing include: A. Stretching payables C. Reducing inventory B. Issuing bonds D. All of the above 24. How does long-term financing policy affect short-term financing requirements? A. The nature of the firm's short-term financial planning problem is determined by the amount of long-term capital it raises. B. A firm that issues large amounts of long-term debt or common stock, or that retains a large part of its earnings, may find that it has permanent excess cash. Other firms raise relatively little long-term capital and end up as permanent short-term debtors. C. Most firms attempt to find a golden mean by financing all fixed assets and part of current assets with equity and long-term debt. Such firms may invest cash surpluses during part of the year and borrow during the rest of the year. D. All of the above affect short-term financing. Judgmental approach 21. Under the judgmental approach for developing a pro forma balance sheet, the “plug” figure required to bring the statement into balance may be called the 105
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Financial Management A. retained earnings C. suspense account B. accounts receivable D. required new financing Percent of sales method 6. The percent of sales method is based on which of the following assumptions?
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This note was uploaded on 11/22/2010 for the course CAC BSA taught by Professor Kairus during the Spring '10 term at Korea University.

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13 x11 Financial - FinancialManagement(A.FinancialPlanning&Strategies MODULE 11 FINANCIAL MANAGEMENT A FINANCIAL PLANNING AND STRATEGIES THEORIES

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