Homework Answers
Inventory can be forecasted using multiple methods like historical and cyclical averages, sales force forecast, market research etc depending on the product, market and forecasted market scenario.
Similarly accounts payable is also depended on the sales, COĢS, the supply chain related parameters, revenue, the credit payment history, history of payment defaults etc.
Thus a multiple factors can contribute to inventory and accounts payable forecast, pinpointing one factor is difficult
But from the options above, option B is the best option as COGS has a direct impact on the inventory and accounts payable as they define the minimum price for the inventory and the payments due to the suppliers.
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11. Which is the recommended way to forecast items such as inventory and accounts payable? a)...
10. Which of the following is the recommended approach to forecast COGS, and why? a) Forecast...
10. Which of the following is the recommended approach to forecast COGS, and why? a) Forecast COGS based on revenue growth, since it provides flexibility in the model. b) Forecasting COGS based on the forecast ratio of COGS to sales allows for possible improvements in COGS relative to sales. c) Forecast COGS based on revenue growth since COGS and revenues have a direct relationship. d) Forecasting COGS based on inventory is recommended because inventory prices and COGS are correlated.
Q.12 11 Tulevasted. poutny assets and operating d) Inventory and accounts payable should be forecasted based...
Q.12
11 Tulevasted. poutny assets and operating d) Inventory and accounts payable should be forecasted based on total assets, as these tend to scale together 12. Which of the following are true concerning forecasting interest income? I. It is a nonoperating measure. II. Its typical forecast driver is revenue. III. It is typically the same from year to year for firms that generate high cash flow. IV. The typical forecast ratio is interest income in the current period divided by...
Analyze, Forecast, and Interpret Income Statement and Balance Sheet
Following are the income statement and balance sheet of DP Inc.DATA PROCESSING INC.Statement of Consolidated EarningsFor Year Ended June 30, 2019, $ millionsTotal revenues$14,175.2Operating expenses7,145.9Systems development and programming costs636.3Depreciation and amortization304.4Total cost of revenues8,086.6Selling, general, and administrative expenses3,064.2Interest expense129.9Total expenses11,280.7Other (income) expense, net(111.1)Earnings before income taxes3,005.6Provision for income taxes712.8Net earnings$2,292.8DATA PROCESSING INC.Balance Sheet$ millionsJune 30,2020ForecastCurrent assetsCash and cash equivalents$1,949.2Accounts receivable, net2,439.3Other current assets519.6Total current assets before funds held for clients4,908.1Funds half for clients29,434.2Total current assets34,342.3Long-term receivables, net23.8Property, plant and equipment,...
Instructions: Complete the 2006 forecast using the assumptions below. If a line does not have an...
Instructions:
Complete the 2006 forecast using the assumptions below. If a
line does not have an explicit assumption, you should be able to
figure it out through logic (using the structure of the financial
statements and/or some simple math). Your forecast
should result in entries in all the green-shaded cells below.
The firm does not pay any dividends, so all net income will flow
to Net Worth on the Balance Sheet.
We will plug the cash account on the balance sheet...
XYZ Company Balance Sheet 12/31/XXXX Assets A Current Assets Cash Accounts Receivable Inventory Prepaid Items Other...
XYZ Company Balance Sheet 12/31/XXXX Assets A Current Assets Cash Accounts Receivable Inventory Prepaid Items Other CA Total Current Assets Net Plant & Equipment Total Assets $7,500 12,100 10,400 5,900 4,300 $40,200 82,300 $122,500 XYZ Company Balance Sheet 12/31/xxxx Liabilities & Equity Current Liabilities Accounts Payable Wages Payable Notes Payable Taxes Payable Total Current Liabilities Long Term Debt Total Liabilities $7,200 3,600 5,400 4.200 $20,400 35,700 $56,100 Common Stock Retained Earnings 28,700 37,700 Total Liabilities & Equity $122,500 Homework Problem,...
Assume current liabilities include only items from operations (e.g., accounts payable, taxes payable). Long-term liabilities include...
Assume current liabilities include only items from operations (e.g., accounts payable, taxes payable). Long-term liabilities include items from financing (e.g. bonds and other long-term liabilities). Note that the company did not sell any equipment and did not borrow any additional long-term liabilities throughout the year. Prepare the cash flow statement for 2020 using the indirect method. Assume no dividends were declared or paid in 2020. Do not enter dollar signs commas in the input boxes. Use the negative sign for...
Solve thes questions with work. Answers provided The projected sales for the forecast period is $165,000....
Solve thes questions with work. Answers provided The projected sales for the forecast period is $165,000. Assume that the payout ratio will be maintained in the forecast period. The firm estimates that additional net fixed asset investment of $18,000 will be required during the forecast period. Assume that all current assets are spontaneous except Other Current Assets which is assumed not to change. Assume that all current liabilities except Notes Payable are spontaneous. A. Prepare the pro forma Balance Sheet...
Which of the following is NOT a best practice for financial model inputs? Add comments to...
Which of the following is NOT a best practice for financial model inputs? Add comments to cells to give more information Use colour to separate inputs from outputs Data should only be entered once Protect inputs by locking input cells 2 Complex financial models are all of the following EXCEPT: They typically model most outputs from first principles They are more prone to error due to size and complexity They are easy to follow and audit They offer users a...
Problem 12-09 Financing Deficit Garlington Technologies Inc.'s 2016 financial statements are shown below: Balance Sheet as of December 31, 2016 Cash $ 180,000 Accounts payable $ 360,000...
Problem 12-09 Financing Deficit Garlington Technologies Inc.'s 2016 financial statements are shown below: Balance Sheet as of December 31, 2016 Cash $ 180,000 Accounts payable $ 360,000 Receivables 360,000 Notes payable 156,000 Inventories 720,000 Line of credit 0 Total current assets $1,260,000 Accruals 180,000 Fixed assets 1,440,000 Total current liabilities $ 696,000 Common stock 1,800,000 Retained earnings 204,000 Total assets $2,700,000 Total liabilities and equity $2,700,000 Income Statement for December 31, 2016 Sales $3,600,000 Operating costs 3,279,720 EBIT $ 320,280...
Annual sales $9,700,000 Cost of goods sold $7,275,000 Inventory $3,200,000 Accounts receivable $1,800,000 Accounts payable $2,400,000...
Annual sales $9,700,000 Cost of goods sold $7,275,000 Inventory $3,200,000 Accounts receivable $1,800,000 Accounts payable $2,400,000 Blue Ostrich's CFO is interested in determining the length of time funds are tied up in working capital. Use the information in the preceding table to complete the following table. (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.) Value Inventory conversion period Average collection period Payables deferral period Cash conversion cycle...
10. Which of the following is the recommended approach to forecast COGS, and why? a) Forecast COGS based on revenue growth, since it provides flexibility in the model. b) Forecasting COGS based on the forecast ratio of COGS to sales allows for possible improvements in COGS relative to sales. c) Forecast COGS based on revenue growth since COGS and revenues have a direct relationship. d) Forecasting COGS based on inventory is recommended because inventory prices and COGS are correlated.
Q.12
11 Tulevasted. poutny assets and operating d) Inventory and accounts payable should be forecasted based on total assets, as these tend to scale together 12. Which of the following are true concerning forecasting interest income? I. It is a nonoperating measure. II. Its typical forecast driver is revenue. III. It is typically the same from year to year for firms that generate high cash flow. IV. The typical forecast ratio is interest income in the current period divided by...
Instructions:
Complete the 2006 forecast using the assumptions below. If a
line does not have an explicit assumption, you should be able to
figure it out through logic (using the structure of the financial
statements and/or some simple math). Your forecast
should result in entries in all the green-shaded cells below.
The firm does not pay any dividends, so all net income will flow
to Net Worth on the Balance Sheet.
We will plug the cash account on the balance sheet...
XYZ Company Balance Sheet 12/31/XXXX Assets A Current Assets Cash Accounts Receivable Inventory Prepaid Items Other CA Total Current Assets Net Plant & Equipment Total Assets $7,500 12,100 10,400 5,900 4,300 $40,200 82,300 $122,500 XYZ Company Balance Sheet 12/31/xxxx Liabilities & Equity Current Liabilities Accounts Payable Wages Payable Notes Payable Taxes Payable Total Current Liabilities Long Term Debt Total Liabilities $7,200 3,600 5,400 4.200 $20,400 35,700 $56,100 Common Stock Retained Earnings 28,700 37,700 Total Liabilities & Equity $122,500 Homework Problem,...
Assume current liabilities include only items from operations (e.g., accounts payable, taxes payable). Long-term liabilities include items from financing (e.g. bonds and other long-term liabilities). Note that the company did not sell any equipment and did not borrow any additional long-term liabilities throughout the year. Prepare the cash flow statement for 2020 using the indirect method. Assume no dividends were declared or paid in 2020. Do not enter dollar signs commas in the input boxes. Use the negative sign for...
Which of the following is NOT a best practice for financial model inputs? Add comments to cells to give more information Use colour to separate inputs from outputs Data should only be entered once Protect inputs by locking input cells 2 Complex financial models are all of the following EXCEPT: They typically model most outputs from first principles They are more prone to error due to size and complexity They are easy to follow and audit They offer users a...
Annual sales $9,700,000 Cost of goods sold $7,275,000 Inventory $3,200,000 Accounts receivable $1,800,000 Accounts payable $2,400,000 Blue Ostrich's CFO is interested in determining the length of time funds are tied up in working capital. Use the information in the preceding table to complete the following table. (Note: Use 365 days as the length of a year in all calculations, and round all values to two decimal places.) Value Inventory conversion period Average collection period Payables deferral period Cash conversion cycle...
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