FIN 571 Week 6 Practice Quiz
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FIN 571 Week 6 Practice Quiz

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  • FIN 571 Week 6 Practice Quiz.docx

Short-term and long-term financing are used to meet the firm's XYZ company has current liabilities of $100,000 and current assets of $175,000. The company's net working capital is _____. Starting in 2018 with a reduced tax rate in place, U.S. corporations no longer have an incentive to leave profits abroad. Holdings of marketable securities are best at at what investment for a taxpaying firm? Which of the following items is a current liability on the balance sheet? If the firm is a short-term lender Net working capital is equal to Starting in 2018, the United States moved to a territorial system with a corporate tax rate of: The financial statement used to report changes that took place in the cash account is the There are advantages to holding a reservoir of cash for smaller firms, who may face higher costs to raise funds on short notice. Financial mangers use _____ to anticipate future sources and uses of cash. Short-term borrowing is classified as A sales forecast enables financial mangers to determine The financial statement of cash flows shows the increases and decreases in cash corresponding to which of the following activities? Which of the following are purposes for forecasting future sources and uses of cash? Mahan Corporation had sales on account of $30,000 in January, $40,000 in February, and $37,000 in March. 75% is collected in the month of the sale and 25% is collected in the month following the sale. The amount of cash collected in March is anticipated to be _____. If the firm is a short-term borrower The financial statement used to report changes that took place in the cash account is the Which of the following are identified as uses of cash for forecasting purposes? Financial mangers use _____ to anticipate future sources and uses of cash. Mahan Corporation had sales on account of $30,000 in January, $40,000 in February, and $37,000 in March. 75% is collected in the month of the sale and 25% is collected in the month following the sale. The amount of cash collected in February is anticipated to be _____. When long-term financing more than covers the cumulative capital requirement, the firm has a surplus of _____ available for short-term financing Based on the cash forecast, Mahan Corporation has a cash deficit of $30,000 in January, requires a minimum operating cash balance of $5,000, and has a beginning cash balance of $2,000. How much will Mahan Corporation need to borrow? The second step in preparing a cash budget is to: When a company puts off paying its bills, it is using a form of short-term financing called: Based on the cash forecast, Mahan Corporation has a beginning cash balance of $5,000 in February, requires a minimum operating cash balance of $5,000, and has a net cash inflow of $25,000. How much will Mahan Corporation need to borrow? A bank loan that is 3% per quarter has an annual rate of Which of the following are considered sources of short-term financing? Stretching payables can be a costly term of short-term financing because: When firms need short-term financing, which strategy is most common? With _______, a firm can borrow up to a certain amount with an agreed upon interest rate. If a supplier offers a 1% discount monthly, and we forego the discount to stretch payables, this suggests an annualized rate of borrowing of Using a bank loan to its limit is typically preferable to stretching payables. The best way for a firm to determine its short-term financing plan is through: Which of the following are questions financial managers ask when determining the appropriate short-term financial plan for their firm? Which of the following relates to short-term planning, but not long-term planning? Which of the following are components included in financial plans? A company's financial planners expect sales to increase by 20% over the next year and expect costs to be a fixed proportion of sales. Given this information, the financial planners will use the _____ model. Which of the following relates to long-term planning, but not short-term planning? Which of the following are benefits of building financial plans? Which of the following are reasons why financial planners use financial planning models? What is the first step managers take to determine how much external capital a firm requires? Mahan Corporation expects total sales to increase by 20% over the next year. The corporation has no spare capacity and must increase plant and equipment by 20%. The corporation currently has $100,000 in assets, $40,000 in debt, and $60,000 in equity. The corporation desires to maintain the debt-equity ratio. The corporation's equity will be _____. A planning model in which sales forecasts are the driving variables and most other variables are proportional to sales. Which of the following are included in a firm's total uses of cash calculation? All forecasted variables will be proportional to the level of sales. What is the correct order a firm should follow to determine how much external capital will be required to finance operations? Mahan Corporation expects total sales to increase by 20% over the next year. The corporation has no spare capacity and must increase plant and equipment by 20%. The corporation currently has $100,000 in assets, $40,000 in debt, and $60,000 in equity. The corporation desires to maintain the debt-equity ratio. The corporation's debt will be _____. A firm has investments in fixed assets totaling $1.2 million, investments in net working capital totaling $400,000, and dividend payments totaling $200,000. What is the firm's total use of cash? Percentage of sales models assume that forecasts are proportional to the forecasted level of sales, but which of the following variables contradict this assumption? Mahan Corporation expects total sales to increase by 20% over the next year from this year's level of $50,000. Current costs of $35,000 are expected to increase proportionately The total amount of next year's costs is _____. Which of the following cannot be provided by financial planning models? Mahan Corporation ended the year with $70,000 of sales and $35,000 of net assets. The corporation's managers forecast that sales will increase by 10% in the coming year. The corporation has reinvested earnings of $2,000. Assuming the ratio of net assets to sales remains constant, the corporation's required external financing will be _____. Mahan Corporation anticipates an expected growth rate of 20%. The corporation currently has $30,000 in assets. The amount of the new investment is _____. The amount of external financing that a firm will require depends on the firm's projected _______. Mahan Corporation ended the year with $70,000 of sales and $35,000 of net assets. The corporation's managers forecast that sales will increase by 10% in the coming year. The corporation has no earnings to reinvest. Assuming the ratio of net assets to sales remains constant, the corporation's required external financing will be _____. The formula for internal growth rate is Mahan Corporation anticipates an expected growth rate of 10%. The corporation currently has $100,000 in assets and $4,500 of reinvested earnings. The amount of required external financing is _____. Which of the following are methods a firm can use to achieve a higher growth rate without raising external capital? The sustainable growth rate is equal to Mahan Corporation has assets of $100,000 and reinvested earnings of $50,000. The corporation's internal growth rate is _____. Mahan Corporation has reinvests 25% of its earnings back into the firm. It has a return on equity of 15%. The corporation's sustainable growth rate is _____. Which one of the following is not a reason for compiling financial plans? All of the following are part of the financial planning process except: A percentage-of-sales model forecasts that cost of goods sold will remain at 80% of sales. If sales revenues are expected to grow by 20% next year, cost of goods sold: A planner's percentage of sales model forecasts that sales will grow by 20% next year. If costs of goods sold are proportionate at 70% of sales, then costs of goods sold will: Which one of the following is not typically included among the three major components of a financial planning model? A financial planning model will generally include all of the following except the: If a firm with an asset base of $3 million recently added $150,000 to retained earnings after a dividend payment of $100,000, then its internal growth rate is: The sustainable growth rate: What is the sustainable growth rate for a firm with net income of $2.5 million, cash dividends of $1.5 million, and return on equity of 18%? What is the maximum internal growth rate for a firm reporting net income of $500,000, a dividend payout ratio of 40%, and total assets of $10 million? Which one of the following is more likely for a firm practicing the relaxed strategy of long-versus short-term borrowing at the height of sales demand? Which one of these is most associated with a disadvantage of the relaxed strategy of long- versus short-term financing? When internally generated cash is temporarily insufficient to meet a firm’s cash need, the firm following a middle-of-the-road policy for long- versus short-term financing will: Which of the following would increase the firm’s cash balance? A firm starts the week with payables of $172,000, it pays $$80,000 of outstanding bills, and purchases $44,000 of raw materials on one month’s credit. What is the change in its cash balance over the week? Managers are alerted to projected cash shortages by means of the: Clopton Inc. forecasts cash sales of $18 million in January, $23 million in February and $25 million in March. Credit sales in these three months are forecast at $80 million, $110 million and $145 million. On average 50% of credit sales are paid for in the current month, 30% in the next month, and the remainder in the following month. What is the expected cash inflow in March? Which of the following statements is not true of short-term financial planning? There are three steps to constructing a cash budget. Which of the following is not one of those steps? Managers who "stretch their payables" are attempting to:

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