chap004

chap004 - Chapter 004 Long-Term Financial Planning and...

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Chapter 004 Long-Term Financial Planning and Growth Multiple Choice Questions 1. The long-range time period, usually the next two to five years, over which the financial planning process focuses is known as the: A . planning horizon. b. planning strategy. c. planning agenda. d. short-run. e. current financing period. SECTION: 4.1 TOPIC: PLANNING HORIZON TYPE: DEFINITIONS 2. The process by which smaller investment proposals of each of a firm's operational units are added up and treated as one big project is known as: a. separation. B . aggregation. c. conglomeration. d. appropriation. e. striation. SECTION: 4.1 TOPIC: AGGREGATION TYPE: DEFINITIONS 3. The financial planning method in which accounts vary depending on a firm's predicted sales level is called the _____ approach. A . percentage of sales b. sales dilution c. sales reconciliation d. common-size e. time-trend SECTION: 4.3 TOPIC: PERCENTAGE OF SALES APPROACH TYPE: DEFINITIONS 4-1
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Chapter 004 Long-Term Financial Planning and Growth 4. The dividend payout ratio is calculated as: a. net income minus additions to retained earnings. b. cash dividends divided by the change in retained earnings. C . cash dividends divided by net income. d. net income minus cash dividends. e. one plus the retention ratio. SECTION: 4.3 TOPIC: DIVIDEND PAYOUT RATIO TYPE: DEFINITIONS 5. The retention ratio is calculated as: a. one plus the dividend payout ratio. B . the additions to retained earnings divided by net income. c. the additions to retained earnings divided by dividends paid. d. net income minus additions to retained earnings. e. net income minus cash dividends. SECTION: 4.3 TOPIC: RETENTION RATIO TYPE: DEFINITIONS 6. The capital intensity ratio is the: a. ratio of fixed assets to current assets. b. ratio of total assets to total equity. c. amount of fixed assets required to generate $1 in sales. D . amount of total assets required to generate $1 in sales. e. the amount of sales generated from every $1 in total assets. SECTION: 4.3 TOPIC: CAPITAL INTENSITY RATIO TYPE: DEFINITIONS 4-2
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Chapter 004 Long-Term Financial Planning and Growth 7. The internal growth rate of a firm is best described as the: a. minimum growth rate achievable if the firm does not pay out any cash dividends. b. minimum growth rate achievable if the firm maintains a constant equity multiplier. C . maximum growth rate achievable without external financing of any kind. d. maximum growth rate achievable without using any external equity financing while maintaining a constant debt-equity ratio. e. maximum growth rate achievable without any limits on the level of debt financing. SECTION: 4.4 TOPIC: INTERNAL GROWTH RATE TYPE: DEFINITIONS 8. The sustainable growth rate of a firm is best described as the: a. minimum growth rate achievable if the firm does not pay out any cash dividends. b. minimum growth rate achievable if the firm maintains a constant equity multiplier. c. maximum growth rate achievable without external financing of any kind.
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chap004 - Chapter 004 Long-Term Financial Planning and...

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