Financial Forecasting Quiz

1. What is the primary focus of financial planning?

• A. Daily expenses

• Individual assets

• The big picture and growth strategies

• Tax minimization

2. The process of adding all proposed investment projects to determine total needed investment is known as:

• A. Allocation

• B. Aggregation

• C. Amortization

• D. Consolidation

3. Which of the following is NOT a benefit of financial planning?

• A. It ensures employee promotion

• B. It helps avoid surprises

• It forces goal setting

• It provides a rational way to assess options

4. What is the “heart” of financial planning that drives the rest of the projections?

• A.Net profit

• Total assets

• C. Sales forecast

• D. Retained earnings

5. Which element of the planning model refers to forecasting capital spending and working capital changes?

• A. Asset requirements

• B. Sales forecast

• C. Economic assumptions

• D. Financial requirements

6. An increase in profit margin will most likely lead to:

• A. Decrease in sustainable growth

• B. Increase in external financing

• C. Increase in internal fund generation

• D. Higher dividends

7. What is the main purpose of the Projected Financial Statement (Percent-of-Sales) Method?

• A. To compute taxes
  

• B. To determine product pricing

• C. To estimate external funding needs

• D. To calculate total fixed assets

The formula for AFN is:

• A. Sales – Expenses – Taxes

• B. Required increase in assets – spontaneous liabilities – retained earnings

• C. Retained earnings – liabilities – equity

• D. Assets – Liabilities – Dividends

9. Which of the following does not usually vary spontaneously with sales?

• . Accounts payable

• B. Accrued wages

• C. Notes payable

• D. Accrued taxes

10. What is used as the “plug” to make the statement of financial position balance?

• A. Net income

• B. Additional funds needed

• C. Gross profit

• D. Inventory