Chapter 17 Financial Planning & Forecasting - CHAPTER 17 FINANCIAL PLANNING AND FORECASTING(Difficulty E = Easy M = Medium and T = Tough Multiple

Chapter 17 Financial Planning & Forecasting - CHAPTER 17...

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(Difficulty: E = Easy, M = Medium, and T = Tough) Multiple Choice: Conceptual Easy: Percent of sales method Answer: e Diff: E 1 . The percent of sales method is based on which of the following assumptions? a. All balance sheet accounts are tied directly to sales. b. Most balance sheet accounts are tied directly to sales. c. The current level of total assets is optimal for the current sales level. d. Statements a and c above are correct. e. Statements b and c above are correct. Additional funds needed Diff: E 2.A company is forecasting an increase in sales and is using the AFN model to forecast the additional capital that they need to raise. Which of the following factors are likely to increase the additional funds needed (AFN)? 3.Jefferson City Computers has developed a forecasting model to determine the additional funds it needs in the upcoming year. All else being equal, which of the following factors is likely to increase its additional funds needed (AFN)? Chapter 17 - Page 1 CHAPTER 17 FINANCIAL PLANNING AND FORECASTING
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4.Which of the following is likely to increase the additional funds needed (AFN) in a given year? Diff: E 5.All else equal, which of the following is likely to increase a company’s additional funds needed (AFN)? a.An increase in its dividend payout ratio.b.The company has a lot of excess capacity.c.Accounts payable increase faster than sales.d.All of the statements above are correct.e.None of the statements above is correct.Additional funds neededAnswer: b Diff: E N
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