13. Which of the following statements is correct? a. Any forecast of financial requirements involves determining...
13. Which of the following statements is correct?
a. Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in assets and spontaneous liabilities and subtracting operating income.
b. The projected balance sheet method of forecasting financial needs requires only a forecast of the firm's balance sheet. Although a forecasted income statement helps clarify the financing needs, it is not essential to the balance sheet method.
c. Because dividends are paid after taxes from retained earnings, dividends are not included in the projected balance sheet method of forecasting.
d. The projected balance sheet method forces recognition of the fact that new financing creates additional financial obligations. For instance, new financing can increase expenses which can actually decrease taxes but increase the projected financial need.
e. Financing feedback describes the effect on the firm's stock price of the announcement that the firm will sell new equity or debt to raise needed capital.
Homework Answers
Answer :- Option d). The projected balance sheet method forces recognition of the fact that new financing creates additional financial obligations. For instance, new financing can increase expenses which can actually decrease taxes but increase the projected financial need.
Explanation :- The statement mentioned in option (d) is very correct.
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13. Which of the following statements is correct?
a. Any forecast of financial requirements involves determining...
13. Which of the following statements is correct? a. Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in asset...
13. Which of the following statements is correct? a. Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in assets and spontaneous liabilities and subtracting operating income. b. The projected balance sheet method of forecasting financial needs requires only a forecast of the firm's balance sheet. Although a forecasted income statement helps clarify the financing needs, it is not essential to the balance sheet method. c. Because dividends...
Please don't comment if cannot answer ? 3. Any forecast of financial requirements involves la determining...
Please don't comment if cannot answer ?
3. Any forecast of financial requirements involves la determining how much money the firm will the same period, and (c) subtracting the funds generated from the funds required to determine the external financial requirements. The projected financial statement method is straightforward, one simply projects the asset requirements for the coming period, then projects the abilities and equity that will be generated under normal operations, and subtracts the projected lates/capital from the required assets...
Which of the following statements about the financial planning process is correct? The additional funds needed...
Which of the following statements about the financial planning process is correct? The additional funds needed (AFN) is estimated by summing the expected changes in assets and liabilities that fluctuate with sales and then subtracting the expected operating income. The projected balance sheet method requires only the balance sheet to determine a firm's expected financial needs. The decision as to how a firm should raise additional funds needed (AFN) to meet its financial goals depends on the ability of the...
Forecasted Financial Statements The AFN equation provides useful insights into the forecasting process, but this equation...
Forecasted Financial Statements The AFN equation provides useful insights into the forecasting process, but this equation assumes that all of the firm's key ratios remain constant, which is not likely to hold true. Consequently, it is useful to forecast the firm's financial statements. The firm begins with forecasting its -Select which then eeds into the firm's balance sheet. Management looks at operating a s on their relationship with industry and benchmark averages. The orecasted income statement begins it the prior...
30 eBook Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as...
30 eBook Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12.860 Total assets Total liabilities and equity $29.160 Income Statement for January 1 - December 31, 2018 (Thousands...
USE excel contains the 2018 financial statements of Zeiber Corporation. Forecast Zeiber's 2019 income statement and...
USE excel
contains the 2018 financial statements of Zeiber Corporation. Forecast Zeiber's 2019 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2019 as in 2018. (3) Zeiber will not issue any new stock or new long-term bonds (4) The interest rate is 11% for long-term debt and...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit 0 Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for January 1 - December 31, 2018...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit 0 Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for January 1 - December 31, 2018...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit Total current assets $ 16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for January 1 - December 31, 2018...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: alog $ 4,320 2,880 Balance...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: alog $ 4,320 2,880 Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable Receivables 6,480 Accruals Inventories 9,000 Line of credit Total current assets $16,560 Notes payable Net fixed assets 12,600 Total current liabilities Mortgage bonds Common stock Retained earnings Total assets $29,160 Total liabilities and equity ess 2,100 $ 9,300 3,500 3.500 12,860 $29,160 Income Statement for January 1 - December 31,...
Please don't comment if cannot answer ?
3. Any forecast of financial requirements involves la determining how much money the firm will the same period, and (c) subtracting the funds generated from the funds required to determine the external financial requirements. The projected financial statement method is straightforward, one simply projects the asset requirements for the coming period, then projects the abilities and equity that will be generated under normal operations, and subtracts the projected lates/capital from the required assets...
Forecasted Financial Statements The AFN equation provides useful insights into the forecasting process, but this equation assumes that all of the firm's key ratios remain constant, which is not likely to hold true. Consequently, it is useful to forecast the firm's financial statements. The firm begins with forecasting its -Select which then eeds into the firm's balance sheet. Management looks at operating a s on their relationship with industry and benchmark averages. The orecasted income statement begins it the prior...
30 eBook Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12.860 Total assets Total liabilities and equity $29.160 Income Statement for January 1 - December 31, 2018 (Thousands...
USE excel
contains the 2018 financial statements of Zeiber Corporation. Forecast Zeiber's 2019 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts receivable to sales, and inventories to sales will be the same in 2019 as in 2018. (3) Zeiber will not issue any new stock or new long-term bonds (4) The interest rate is 11% for long-term debt and...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit Total current assets $ 16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for January 1 - December 31, 2018...
Financing Deficit Stevens Textile Corporation's 2018 financial statements are shown below: alog $ 4,320 2,880 Balance Sheet as of December 31, 2018 (Thousands of Dollars) Cash $ 1,080 Accounts payable Receivables 6,480 Accruals Inventories 9,000 Line of credit Total current assets $16,560 Notes payable Net fixed assets 12,600 Total current liabilities Mortgage bonds Common stock Retained earnings Total assets $29,160 Total liabilities and equity ess 2,100 $ 9,300 3,500 3.500 12,860 $29,160 Income Statement for January 1 - December 31,...
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