Chapter 4 - THỨ 3

Which of the following statements about financial planning is correct?

• focuses solely on the short-term outlook for a firm.

• is a process that firms employ only when major changes to a firm's operations are anticipated.

• is a process that firms undergo once every five years.

• considers multiple options and scenarios.

• provides minimal benefits for firms that are highly responsive to economic changes.

Financial planning includes the:

• I and III only

• II and IV only

• I, III, and IV only

• I, II, and III only

• I, II, III, and IV

When planning for the long run, the planning horizon is usually a period of:

• 5 to 10 years.

• 2 to 5 years.

• 1 to 3 years.

• 3 to 7 years.

• 5 years or more.

Which of the following questions are appropriate to address during the financial planning process?

• I only

• II and III only

• I and II only

• I, II, and III only

• I, II, III, and IV

Financial plans:

• concentrate solely on income and expense items.

• often contain alternative options based on economic developments.

• frequently contain conflicting goals.

• assume that firms obtain no additional external financing.

• are based on a single set of economic assumptions.

Which one of the following are you most apt to estimate first as you begin the process of preparing pro forma statements?

• Need for additional fixed assets

• Current fixed costs

• Projected sales

• Desired net income

• Desired dividend payments

Pro forma statements:

• must assume that no new equity is issued.

• are projections, not guarantees.

• are limited to a balance sheet and income statement.

• must assume that no dividends will be paid.

• exclude net working capital needs.

The retention ratio can be computed as:

• 1 – Plowback ratio.

• Change in retained earnings/Cash dividends.

• 1 + Dividend payout ratio.

• (Change in retained earnings + Cash dividends)/Net income.

• 1 – (Cash dividends/Net income).

The financial planning method that uses the projected sales level as the basis for determining changes in balance sheet and income statement account values is referred to as the ________ method.

• percentage of sales

• sales dilution

• sales reconciliation

• common-size

• trend

The portion of net income that a firm reinvests in itself is called the:

• retention ratio.

• dividend yield.

• dividend payout ratio.

• internal growth rate.

• cash influx ratio.