Activity 5 - PROJECTING FINANCIAL REQUIREMENTS

Which of the following is NOT a component of an income statement?

• Revenue

• Inventory

• Expenses

• Net Income

What does the balance sheet show?

• The company’s revenues and expenses over a period

• The company’s assets, liabilities, and equity at a specific point in time

• The company’s cash inflows and outflows

• The company’s profit margin

Which of the following is a current asset?

• Land

• Accounts Receivable

• Bonds Payable

• Retained Earnings

Which item would you NOT find on a cash budget?

• Cash Receipts

• Depreciation Expense

• Cash Payments

• Opening Cash Balance

What is the main purpose of preparing a cash budget?

• To calculate net income

• To estimate future cash inflows and outflows

• To determine the value of assets

• To record historical transactions

Which of the following best describes sensitivity analysis?

• Analysing only the best-case scenario

• Testing how changes in one variable affect outcomes

• Calculating depreciation

• Preparing a cash budget

Which ratio is commonly used to measure a company’s sustainable growth rate?

• Current Ratio

• Return on Equity (ROE)

• Debt-to-Equity Ratio

• Gross Profit Margin

If a company’s sales are growing faster than its sustainable growth rate, what is a likely consequence?

• Excess cash reserves

• Need for external financing

• Decrease in assets

• Lower inventory turnover

Which of the following is NOT a component of equity on the balance sheet?

• Common Shares

• Retained Earnings

• Accounts Payable

• Contributed Surplus

Which financial statement would you use to determine a company’s profitability over a year?

• Balance Sheet

• Income Statement

• Cash Budget

• Statement of Retained Earnings