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5 Written questions

5 Matching questions

  1. Financial statement
  2. Forecasts
  3. Price-to-earnings ratio
  4. Pro forma financial statements
  5. Fixed assets
  1. a a written report that quantitatively describes a firm's financial health.
  2. b assets used over a longer time frame, such as real estate, buildings, equipment, and furniture.
  3. c projections for future periods based on forecasts and are typically completed for two to three years in the future.
  4. d a simple ratio that measures the price of a company's stock against its earnings.
  5. e an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

5 Multiple choice questions

  1. or return on sales, is computed by dividing net income by net sales.
  2. if a firm uses percent-of-sales method, then the net result that each expense item (except depreciation) on its income statement will grow at the same rate as sales.
  3. miscellaneous assets, including accumulated goodwill.
  4. include cash raised during the period by borrowing money or selling stock and/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.
  5. a new firm's forecast should be preceded in its business plan by an explanation of the sources of the numbers for the forecast and the assumptions used to generate them.

5 True/False questions

  1. Accounts receivablean estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

          

  2. Pro forma income statementprojections for future periods based on forecasts and are typically completed for two to three years in the future.

          

  3. Financial managementdeals with two activities: raising money and managing a company's finances in a way that achieves the highest rate of return .

          

  4. Working capitalan estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

          

  5. Percent-of-sales methodincludes all the direct costs associated with producing or delivering a product or service, including the material costs and direct labor.