Homework Answers
Answer
Assumes that the balance sheet accounts maintain a constant relationship to sales.
Explanation:
The percent of sale method of financial forecasting is appropriate if the assets or liability being forecast varies a constant percentage of revenues and the firm plans to make adjustment to account balances on a regular basis in response to changing the sales.
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The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particular, some firms use regression analysis to predict the required assets needed to support a given level of sales. Mainway Toys Co. has used its historical sales and asset data to estimate the following regression equations: Accounts Receivable = = -$85,230 +0.249(Sales) $9,340 +...
The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the...
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A company is preparing its cash budget for the coming month. All sales are on account. Given the following: Budget Amounts Beginning Balances $230,000 210,000 Cash Accounts Receivable Sales Cash disbursements Depreciation Ending accounts receivable balance $ 950,000 1,080,000 40,000 240,000 What is the expected cash balance of the company at the end of the coming month? (CIA adapted) Multiple Choice 0 $26,300 < Prev 13 of 34 8 Next >
a) Sales budget October November December Cash Sales $ 126,000.00 $ 157,500.00 $ 196,875.00 Sales on Account $ 154,000.00 $ 192,500.00 $ 240,625.00 Total Budgeted Sales $ 280,000.00 $ 350,000.00 $ 437,500.00 b) Schedule of cash receipts October November December Current Cash sales $ 126,000.00 $ 157,500.00 $ 196,875.00 Add: Collection From A/R $ $ 154,000.00 $ 192,500.00 Total Collections $ 126,000.00 $ 311,500.00 $ 389,375.00 C) Inventory purchase budget October November December Budgeted Cost of goods sold $ 168,000.00...
The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particular, some firms use regression analysis to predict the required assets needed to support a given level of sales. Incom Corp. has used its historical sales and asset data to estimate the following regression equations: Accounts Receivable Inventories = = -$99,220 + 0.249(Sales) $10,120...
The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particular, some firms use regression analysis to predict the required assets needed to support a given level of sales. Mainway Toys Co. has used its historical sales and asset data to estimate the following regression equations: Accounts Receivable = = -$85,230 +0.249(Sales) $9,340 +...
The AFN equation and the financial statement-forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particular, some firms use regression analysis to predict the required assets needed to support a given level of sales. General Services Corp. has used its historical sales and asset data to estimate the following regression equations: Accounts Receivable Inventories - - -$85,230 + 0.265(Sales)...
(Financial forecasting-percent of sales) Tulley Appliances, Inc. projects next year's sales to be $19.7 million. Current sales are at $14.8 million, based on current assets of $4.7 million and fixed assets of $4.8 on. The firm's net profit margin is 4.7 percent after axes. Tulley forecasts at current assets will rise in direct proportion the increase n sales, t fixed assets wil ncrease by ont 51 O. Currently T has $1.5 million in accounts payable (which vary directly with sales),...
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