FINANCIAL MODELLING

1. A forecast balance sheet could be estimated based on a firm's past financial ratios and statements

True

False

2. A cash budget is a byproduct (secondary result) of producing forecast financial statements. *

True

False

3. The ending cash balance of the cash budget should be equal to the net income shown on the income statement. *

True

False

4. Other things held constant, the more debt a firm uses, the lower its return on total assets will be *

True

False

5. Firms A and B have the same current ratio, 0.75, the same amount of sales, and the same amount of current liabilities. However, Firm A has a higher inventory turnover ratio than B. Therefore, we can conclude that A's quick ratio must be smaller than B's. *

True

False