FIN-325-Chapter 4

When a financial manager estimates the values of various balance sheet accounts and then fills the funding gap with a "plug" number to represent external financing needs it is known as the __________ to create pro forma financial statements.
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When a financial manager estimates the values of various balance sheet accounts and then fills the funding gap with a "plug" number to represent external financing needs it is known as the __________ to create pro forma financial statements.
judgmental approach
The allocation of a tangible asset's historical cost over the useful life of that asset is called __________.
depreciation
Coastal Industries purchased a computer, which is a 5 year asset under MACRS, for $2,400. What is first year depreciation?
$2,400 * 20% = $480
A cash budget is useful for:
short-term financial planning
When preparing a pro forma balance sheet under the judgmental approach, a ______ is used to indicate the amount of external financing needed to bring the statement to balance.
plug figure
Which of the following is a component of a cash budget?
Wages
The most important element in determining the accuracy of most cash budgets is the forecast of __________
sales
The method of depreciation used for tax purposes is the __________.
modified accelerated cost recovery system
The primary use of the percent-of-sales forecast method is to prepare:
pro forma income statement
The cash flows associated with normal business activities are included in the cash flows from __________ section of the statement of cash flows.
operating activities
Net operating profits after taxes (NOPAT) excludes ______.interestA firm's free cash flows can be represented with the following formula:Operating cash flow - Net fixed asset investment - Net current asset investmentCoastal Industries purchased a computer, which is a 5 year asset under MACRS, for $2,400. What is second year depreciation?$2,400 * 32% = $768If sales fall, then the percent-of-sales method may __________ profits if fixed costs do not decline by the same amount of the sales decline.overstateA long-term financial plan forecasts the firm's:financial actions and anticipated impact of those actions over 2 to 10 yearsThe short-term financial plan forecasts the firm's financial actions over a period of ______.1 to 2 yearsThe first step in forecasting short-term and long-term financial needs is to:construct a sales forecast.Which of the following is considered to be a financing activity?Making a dividend paymentKale Corporation has sales of $100,000, $120,000, and $130,000 in January, February, and March, respectively. Historically, 30% of the firm's sales have been made in cash, 45% have generated accounts receivable collected after one month, and the remaining 25% has been collected after two months. Based on this information, how much cash will Kale collect in March?See Excel $118,000The depreciable life of an asset is the __________.time period over which the asset can be expensedWhich of the follow refers to the cash flow a firm generates from its normal operations?operating cash flowWhich of the following is NOT an objective of long-term financial plans?Create annual operating and cash budgets.Which of these is an example of a cash outflow?Increase in accounts receivableWhich of these is an example of a cash inflow?Increase in accounts payable