Financial Projections and Budgets

What is the purpose of financial projections?

• To assess the feasibility and sustainability of a business.
• To determine the daily sales of a business.
• To forecast the expenses to be incurred.
• To calculate the profits to be made.

Which of the following is NOT an internal factor that should be considered when making financial projections?

• The firm's capabilities (strengths and weaknesses).
• The economic outlook.
• The company's human resources.
• The firm's marketing strategies.

What is a strategic plan?

• A detailed plan for a specific business unit.
• A plan outlining the activities to be undertaken in a department.
• A plan that sets the overall objectives of an organization.
• A projection of sales for a product or service.

Which of the following is NOT an element of a strategic plan?

• Vision Statement
• Mission Statement
• SWOT Analysis
• Corporate Strategies

What is a SWOT analysis used for?

• To assess the firm's financial performance.
• To determine the firm's competitive position in the industry.
• To identify internal strengths and weaknesses, and external opportunities and threats.
• To create a sales forecast.

What is the primary focus of a sales forecast?

• Predicting the future sales of a product or service.
• Estimating the cost of manufacturing a product.
• Determining the production volume required to meet sales targets.
• Forecasting the cash flow of a business.

Which of the following factors should be considered when preparing a sales forecast?

• Inflation rate
• Trends in the market
• Investment climate
• All of the above

What is a projected financial statement?

• A forecast of an entity's expected financial positions, results of operations, and cash flows.
• A summary of the quantity of direct materials required for production.
• A detailed projection of all income and expenses for a given period.
• A tool used to control the flow of cash in a business.

Which of the following is NOT a factor considered when preparing projected financial statements?

• Market conditions
• Economy
• Competitive position of the firm in the industry
• Depreciation expense

What is the purpose of a budget?

• To determine the profitability goal of a firm.
• To create a projected balance sheet.
• To forecast the cash flow of a business.
• To control and manage resources.