Exam 4: Long-Term Financial Planning and Growth

A) 0.62
B) 0.68
C) 0.77
D) 1.35
E) 1.47

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C

A) 10.30 percent
B) 10.53 percent
C) 10.67 percent
D) 10.89 percent
E) 11.01 percent

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A) conjoining
B) aggregation
C) conglomeration
D) appropriation
E) summation

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A) percentage of sales method
B) sales dilution method
C) sales reconciliation method
D) common-size method
E) trend method

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A) retained earnings
B) net working capital and retained earnings
C) net income and retained earnings
D) debt or equity
E) owners' equity, including retained earnings

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With a negative external financing need,the firm has a surplus of funds that it can use to reduce current liabilities,reduce long-term debt,buy back common stock,or increase dividends.If acceptable opportunities exist,the firm might also use the extra funds to purchase fixed assets thereby increasing its maximum capacity level,should that need be anticipated.

A) 2.91 percent
B) 3.44 percent
C) 3.87 percent
D) 4.02 percent
E) 4.14 percent

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A) Fixed assets must increase if sales are projected to increase.
B) Net working capital is affected only when a firm's sales are expected to exceed the firm's current production capacity.
C) The addition to retained earnings is equal to net income plus dividends paid.
D) Long-term debt varies directly with sales when a firm is currently operating at maximum capacity.
E) Inventory changes are directly proportional to sales changes.

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The four f...

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A) assumes there is no external financing of any kind.
B) assumes no additional long-term debt is available.
C) assumes the debt-equity ratio is constant.
D) assumes the debt-equity ratio is 1.0.
E) assumes all income is retained by the firm.

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A) equal to net income divided by the change in total equity.
B) the percentage of net income available to the firm to fund future growth.
C) equal to one minus the retention ratio.
D) the change in retained earnings divided by the dividends paid.
E) the dollar increase in net income divided by the dollar increase in sales.

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A) internal growth rate × (1 - 0.10)
B) sustainable growth rate × (1 - 0.10)
C) internal growth rate
D) sustainable growth rate
E) zero percent

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A) minimum growth rate achievable assuming a 100 percent retention ratio.
B) minimum growth rate achievable if the firm maintains a constant equity multiplier.
C) maximum growth rate achievable excluding external financing of any kind.
D) maximum growth rate achievable excluding any external equity financing while maintaining a constant debt-equity ratio.
E) maximum growth rate achievable with unlimited debt financing.

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C

A) 7.68 percent
B) 9.52 percent
C) 11.12 percent
D) 13.49 percent
E) 14.41 percent

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The basic assumptions are: Costs and net...

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A) accounts receivable
B) cost of goods sold
C) accounts payable
D) fixed assets
E) inventory

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A) 4.72 percent
B) 5.08 percent
C) 5.49 percent
D) 6.23 percent
E) 7.24 percent

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A) $12,711
B) $13,333
C) $13,556
D) $13,809
E) $14,357

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