Question

elucescurate results unless which of the following 0. The projected balance sheet forecasting method condition(s) is (are) present? Fixed assets are "lumpy." Strong economies of scale are present. Excess capacity exists because of a temporary recession. Answers a, b, and call make the projected balance sheet method inaccurate. Answers a ande make the projected balance sheet method inaccurate, but, as the text explains, th assumption of increasing economies of scale is built into the projected balance sheet method. 27. Which of the following is a key determinant of operating leverage? Level of debt. Physical location of production facilities. Cost of debt. Technology Capital structure. 28. Which of the following is a key determinant of financial leverage? Level of debt. Technology Labor costs Amount of fixed assets used by the firm Variable cost of goods sold. 29. Which of the following is (are) typically part of the cash budget? Payments lag Payment for plant construction, Cumulative cash. All of the above. Only answers a and c above. 30. The financial breakeven point for a firm is defined as the level of sales: EBIT. sales, gross profit. EPS; sales. gross profit: EBIT. EBIT: EPS. that produces - equal to zero.

Answer 1

(26) Option ( E)

if

1st) condition : fixed assets are lumy i.e are purchased in large increments and cannot buy a half machine.

2nd) condition: temporary recession exists.

These condition are present projected balansheet forecasting cannot produce the accurate result.

Hence answer is option (E).