Question 1

Which one of the following statements is NOT true about financial planning models?

Accepted Answer

A)   Financial statements serve as the first major input and become the baseline to compare the projected financial statements.
B)   Macroeconomic forecasts and their impact on the firm's sales are also included.
C)   Investment and financing decisions are not considered as inputs.
D)   Changes in the firm's balance sheet and income statement items as a result of the growth in sales are also used in these models.E) All of the above
F) B) and D)

Question 2

The outputs of the financial planning model are a series of pro forma financial statements and financial ratios based on these statements.

Accepted Answer

A) True 
 B)False

Question 3

Firms that achieve higher growth rates without seeking external financing

Accepted Answer

A)   have a high plowback ratio.
B)   have less equity and/or are able to generate high net income leading to a high ROE.
C)   are not highly leveraged.
D)   All of the above are true.E) C) and D)
F) None of the above

Question 4

Pro forma financial statements that result from financial planning models are always perfectly balanced.

Accepted Answer

A) True 
 B)False

Question 5

The sustainable growth rate is the rate of growth that the firm can sustain without selling additional equity.

Accepted Answer

A) True 
 B)False

Question 6

The sales forecasts used in financial planning

Accepted Answer

A)   are developed using a variety of techniques.
B)   are generated within the firm.
C)   utilize macroeconomic variables as input.
D)   All of the above are true.E) A) and B)
F) A) and C)

Question 7

The financing plan of a firm will indicate

Accepted Answer

A)   the dollar amount of funds that has to be raised externally and the sources of funds available to the firm, the desired capital structure for the firm, and the firm's dividend policy.
B)   the dollar amount of funds that has to be raised externally and the sources of funds available to the firm, the desired capital structure for the firm, and the firm's working capital policy.
C)   the dollar amount of funds that has to be raised externally and the sources of funds available to the firm, the firm's dividend policy, and the firm's working capital policy.
D)   the firm's dividend policy, the desired capital structure for the firm, and the firm's working capital policy.E) A) and D)
F) C) and D)

Question 8

Firms that are not highly capital intensive are more risky than those that are.

Accepted Answer

A) True 
 B)False

Question 9

Financial planning models

Accepted Answer

A)   help management make investment decisions.
B)   help management make financing decisions.
C)   make the process speedy and accurate.
D)   all of the above are true.E) C) and D)
F) A) and D)

Question 10

Financial models provide management with the ability to prepare projected financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Addition to retained earnings: Tangent, Inc., has revenues of $4,375,233 and costs of $2,467,321, and pays a tax rate of 34 percent. If the firm pays out 60 percent of its earnings as dividends every year, what is the amount of retained earnings?

Accepted Answer

A)   $171,254.18
B)   $755,533.15
C)   $503,688.77
D)   None of the above.E) A) and C)
F) B) and C)

Question 12

The financing plan documents the firm's long-term goals, the strategies that management will use to achieve the goals, and the capabilities the firm needs to sustain its competitive position.

Accepted Answer

A) True 
 B)False

Question 13

In using more sophisticated planning models, which one of the following statements is NOT true?

Accepted Answer

A)   Current liabilities are likely to vary directly with sales.
B)   Long-term liabilities and equity accounts change as a direct result of managerial decisions.
C)   Retained earnings will vary as sales changes but not directly as it is affected by the firm's dividend payout policy.
D)   All of the above are trueE) B) and D)
F) A) and C)

Exam 19: Strategic Financial Planning and Forecasting

The sustainable growth rate is the rate of growth that the firm can sustain without selling additional equity.

Correct Answer
verified

Pro forma financial statements that result from financial planning models are always perfectly balanced.

Correct Answer
verified

The financing plan of a firm will indicate

Correct Answer
verified

The outputs of the financial planning model are a series of pro forma financial statements and financial ratios based on these statements.

Correct Answer
verified

The financing plan documents the firm's long-term goals, the strategies that management will use to achieve the goals, and the capabilities the firm needs to sustain its competitive position.

Correct Answer
verified

Financial models provide management with the ability to prepare projected financial statements.

Correct Answer
verified

Financial planning models

Correct Answer
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Firms that are not highly capital intensive are more risky than those that are.

Correct Answer
verified

Which one of the following statements is NOT true about financial planning models?

Correct Answer
verified

Addition to retained earnings: Tangent, Inc., has revenues of $4,375,233 and costs of $2,467,321, and pays a tax rate of 34 percent. If the firm pays out 60 percent of its earnings as dividends every year, what is the amount of retained earnings?

Correct Answer
verified

The sales forecasts used in financial planning

Correct Answer
verified

In using more sophisticated planning models, which one of the following statements is NOT true?

Correct Answer
verified

Firms that achieve higher growth rates without seeking external financing

Correct Answer
verified

Exam 19: Strategic Financial Planning and Forecasting

The sustainable growth rate is the rate of growth that the firm can sustain without selling additional equity.

Correct AnswerverifiedShow Answer

Pro forma financial statements that result from financial planning models are always perfectly balanced.

Correct AnswerverifiedShow Answer

The financing plan of a firm will indicate

Correct AnswerverifiedShow Answer

The outputs of the financial planning model are a series of pro forma financial statements and financial ratios based on these statements.

Correct AnswerverifiedShow Answer

The financing plan documents the firm's long-term goals, the strategies that management will use to achieve the goals, and the capabilities the firm needs to sustain its competitive position.

Correct AnswerverifiedShow Answer

Financial models provide management with the ability to prepare projected financial statements.

Correct AnswerverifiedShow Answer

Financial planning models

Correct AnswerverifiedShow Answer

Firms that are not highly capital intensive are more risky than those that are.

Correct AnswerverifiedShow Answer

Which one of the following statements is NOT true about financial planning models?

Correct AnswerverifiedShow Answer

Addition to retained earnings: Tangent, Inc., has revenues of $4,375,233 and costs of $2,467,321, and pays a tax rate of 34 percent. If the firm pays out 60 percent of its earnings as dividends every year, what is the amount of retained earnings?

Correct AnswerverifiedShow Answer

The sales forecasts used in financial planning

Correct AnswerverifiedShow Answer

In using more sophisticated planning models, which one of the following statements is NOT true?

Correct AnswerverifiedShow Answer

Firms that achieve higher growth rates without seeking external financing

Correct AnswerverifiedShow Answer

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