Question 1

As an analyst it is important when projecting sales to make estimates about future changes in sales volume.Compare how you might make estimates about future sales value for a company in a mature industry and one in a rapidly growing industry.

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Question 2

If a firm operates at less than full capacity,then price _______________________ are not likely

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Question 3

Based on the following statement from the text-"to develop forecasts of individual operating assets and liabilities,you must first determine the underlying operating activities that drive them"-explain what those underlying activities are.

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Question 4

One caused by using turnover ratios to calculate asset balances is that it can lead to volatility in projected ending balances.What might an analyst do to reduce the "sawtooth" pattern caused by using turnover ratios?

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Question 5

A firm in transition from the high growth to the mature phase of its life cycle,or a firm with significant technological improvements in its production processes,might expect increases in ______________________________ but decreases in sales prices per unit.

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Question 6

The following balance sheet and income statement pertain to Goode Corp. ,using the following assumptions complete a forecasted 2013 income statement:

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Question 7

The authors set forth a seven-step forecasting game plan for preparing pro forma financial statements.Discuss the seven steps necessary to prepare the three principal financial statements.

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Question 8

When projecting ____________________,the analyst should consider economy-wide factors such as the expected rate of general price inflation in the economy.

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Question 9

Office Mart,Inc.sells numerous office supply products through a national distribution center.The company has focused on maintaining a cash balance equivalent to approximately 14 days of sales.Sales in 2010 amounted to $125,980,673 and the company expects growth in 2011 of 11% and in 2012 of 15%.Given this information determine Office Mart,Inc.'s projected year-end cash balance for 2011 and 2012.

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Question 10

Analysts must develop realistic expectations for the outcomes of future business activities.
To develop these expectations,analysts build a set of _____________________________.

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Question 11

Simmons Company
These data represent a summary of your first-iteration forecast amounts for Year 1.Simmons uses dividends as a flexible financial account.  A.See the information for Simmons Company.
Compute the amount of dividends you can assume that Simmons will pay in order to balance your projected balance sheet.Present the projected balance sheet.
B.See the information for Simmons Company.
Now assume that Simmons pays common shareholders a dividend of $25 in Year +1.Also assume that Simmons uses long-term debt as a flexible financial account,increasing borrowing when it needs capital and paying down debt when it generates excess capital.For simplicity,assume that Simmons pays 10.0 percent interest expense on the ending balance in long-term debt for the year and that interest expense is tax deductible at Simmons' average tax rate of 20.0 percent.
Present the projected income statement and balance sheet for Year +1.(Hint: Because of the circularity between interest expense,net income,and debt,several iterations may be needed to balance the projected balance sheet and to have the projected balance sheet articulate with net income.You may find it helpful to program a spreadsheet to work the iterative computations. )

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These data represent a summary of...

Question 12

For some types of assets,such as accounts receivable,asset growth typically ____________________ future sales growth.

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Quiz 10: Forecasting Financial Statements