The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless

$3$

we make assumptions about how

and

will grow with sales.

A$)$ dividends, equity

B$)$ coupons, debt

C$)$ debt, equity

D$)$ dividends, preferred stock

The amount of dividends a company pays will affect the it has to finance future growth.

A$)$ debt

B$)$ retained earnings

C$)$ current liabilities

D$)$ current ratio

When making long term plans, any increases in

and reflect capital structure decisions that require managers to actively raise capital.

A$)$ debt, equity

B$)$ debt, assets

C$)$ assets, equity

D$)$ current ratio, equity

LG Inc. has done a long$-$term forecast of its balance sheet. The projected total assets for the next year are $$200$ million. The current liabilities are projected to be $$100$ million and other long term liabilities are $$70$ million. How much net new financing is needed in the following year?

A$)$ $$18$ million

B$)$ $$22$ million

C$)$ $$25$ million

D$)$ $$30$ million

LG Inc. has done a long$-$term forecast of its balance sheet. The projected total assets for the next year are $$300$ million. The current liabilities are projected to be $$170$ million and other long term liabilities are $$70$ million. How net new financing is needed in the following year?

A$)$ $$58$ million

B$)$ $$60$ million

C$)$ $$65$ million

D$)$ $$70$ million

The percent of sales method relies on the idea that capacity increases are $,$ even though in practice such increases are

A$)$ incremental, lumpy

B$)$ incremental, incremental

C$)$ lumpy, incremental

D$)$ lumpy, lumpy