Sales are often correlated to the regional or national economy, and hence economic forecasts are incorporated into the financial planning model.

Question 1 options:

True or False

Question 2(1 point)

Fixed assets vary directly with sales when firms are operating at less than full capacity.

Question 2 options:

True or False

Question 3(1 point)

Financial planning models are not considered an integral part of financial planning.

Question 3 options:

True or False

Question 4(1 point)

In putting together a financial plan, management addresses three main issues through their strategic plan, investment plan, and financing plan.

Question 4 options:

True or False

Question 5(1 point)

The two tools that are particularly useful in understanding the cash requirements of a business and in estimating how much financing a new business will require are the cash flow break-even analysis and the cash budget.

Question 5 options:

True or False

Question 6(1 point)

The value of a business changes over time because:

Question 6 options:

the risk involved in operations do not change.

the factors influencing the valuation can be controlled.

the impact of the business valuation is minimized when timed properly.

the estimates reflects the timing of what economic, industry, and firm conditions are at the time of valuation.

Question 7(1 point)

Which of the following statements is true when managing working capital accounts?

Question 7 options:

All of these are true.

Maintain minimal raw material inventories without causing manufacturing delays.

Use as little labor as possible to manufacture the product while producing a quality product.

Delay paying accounts payable as long as possible without suffering any penalties.

Question 8(1 point)

Which of the following statements about the sustainable growth rate (SGR) is NOT true?

Question 8 options:

The SGR is a function of the plowback ratio and the ROE.

The SGR determines the rate of growth that a firm can sustain without selling additional shares of equity.

The SGR helps management to determine whether they can avoid issuing new debt.

All of these

Question 9(1 point)

Stamp, Inc. has an operating cycle of 81 days and takes 47 days to collect on its receivables. What is its level of inventory if the firm's cost of goods sold is $312,455? Round your final answer to the nearest dollar.

Question 9 options:

$29,105

$69,339

$14,685

$9,190

Question 10(1 point)

West Handicrafts, Inc. has net sales of $423,000 with 30 percent of it being credit sales. Its cost of goods sold is $324,000. The firm's cash conversion cycle is 47.9 days. The firm's operating cycle is 86.3 days. What is the firm's accounts payable? Round to the nearest dollar. Do not round your intermediate calculations.

Question 10 options:

$56,322

$71,203

$34,087

$126,900

Question 11(1 point)

Your boss asks you to compute the company's cash conversion cycle. Looking at the financial statements, you see that the average inventory for the year was $126,300, accounts receivable were $97,900, and accounts payable were at $115,100. You also see that the company had credit sales of $324,000 and that cost of goods sold was $282,000. What is your firm's cash conversion cycle? Round to the nearest day.

Question 11 options:

34 days

125 days

119 days

57 days

Question 12(1 point)

The ability to make the life of a business independent of that of the founder increases the _____ of the ownership interests, making it easier for the business to raise capital.

Question 12 options:

limitation

risk

liquidity

non convertibility

Question 13(1 point)

Reference 14-2: Use the following to answer questions 60-61:

Jensen Autos, one of the largest car dealers in Eau Claire, sells about 700 vehicles a year. The cost of placing an order with their supplier is $1,100, and the inventory carrying costs are $120 for each car. Most of their sales are in late fall of each year.

How many orders will the dealer need to place this year? Round your answer to the whole number.

Question 13 options:

6 orders

4 orders

5 orders

7 orders

Question 14(1 point)

Which of the following statements about working capital trade-off is true?

Question 14 options:

If carrying costs are greater than shortage costs, then the firm will maximize value by adopting a more restrictive strategy.

Financial managers need to balance shortage costs against carrying costs to find an optimal management strategy.

All of these.

If shortage costs dominate carrying costs, the firm will need to move toward a more flexible policy.

Question 15(1 point)

Which of the following issues is NOT addressed in a firm's financial plan?

Question 15 options:

Where is the firm headed?

What capital resources does the management need to get there?

What is the growth rate for the firm's main competitor?

How is the firm going to pay for the resources needed?

Question 16(1 point)

Wolfgang Electricals estimates thatthe company takes 31 days on average to pay off its suppliers. It also knows that it has days' sales in inventory of 54 days and days sales' outstanding of 34 days. What is its cash conversion cycle?

Question 16 options:

46 days

34 days

119 days

57 days

Question 17(1 point)

Which of the following is the equation for net working capital?

Question 17 options:

Current assets / current liabilities

Total assets - total liabilities

Current assets - current liabilities

Total assets / total liabilities

Question 18(1 point)

Which of the following is a part of a financing plan?

Question 18 options:

The dollar amount of funds that has to be raised externally and the sources of funds available to a firm

All of these

The desired capital structure for a firm

A firm's dividend policy

Question 19(1 point)

Mercantile Co. has net income of $3,413,500 on assets of $16,109,445 and retains 55 percent of its income every year. What is the company's internal growth rate? (Do not round intermediate calculations. Round final answer to two decimal places.)

Question 19 options:

8.62%

21.21%

11.65%

9.43%

Question 20(1 point)

Reference 14-2: Use the following to answer questions 60-61:

Jensen Autos, one of the largest car dealers in Eau Claire, sells about 700 vehicles a year. The cost of placing an order with their supplier is $1,100, and the inventory carrying costs are $120 for each car. Most of their sales are in late fall of each year.

What is the number of cars per order? Round your final answer to the nearest whole number.

Question 20 options:

58 cars

101cars

113 cars

80 cars