Question 1

When outside investors and lenders review a company's financial statements, they look for

Accepted Answer

A)   Increasing sales
B)   Decreasing expense
C)   Increasing cash flows
D)   Sufficient cash flows to service debt and provide adequate return
E)   All of the above

Question 2

Preparing sales forecast of a new business may require:

Accepted Answer

A)   Primary market research
B)   Secondary market research
C)   Industry analysis
D)   A and B
E)   A and C

Question 3

The worst case scenario will include:

Accepted Answer

A)   The largest revenue, the largest expense, the largest volume
B)   The largest revenue, the lowest expense, the largest volume
C)   The lowest revenue, the largest expense, the largest volume
D)   The lowest revenue, the lowest expense, the largest volume
E)   The lowest revenue, the lowest expense, the lowest volume

Question 4

In analyzing pro forma financial statements, you should include at the minimum:

Accepted Answer

A)   Worst case
B)   Worst case and most likely case
C)   Best case and worst case
D)   Best case and most likely case
E)   Worst case, best case, and most likely case

Question 5

Pro Forma financial statements include:

Accepted Answer

A)   pro forma income statement
B)   pro forma balance sheet
C)   pro forma statement cash flows
D)   A and B
E)   A, B, and C

Question 6

Since sales forecast is a critical element in preparing pro forma statement, entrepreneurs should be evaluated on

Accepted Answer

A)   their ability to provide a precise forecast
B)   their thought process and assumptions
C)   their accuracy in creating the financial models
D)   the amount of time and effort they devoted to the forecast
E)   All of the above B

Question 7

Methods for estimating expenses for an existing business include:

Accepted Answer

A)   Assuming all expenses will remain a fixed percentage of sales
B)   Assuming that all expenses will increase at specific percentages
C)   Assuming all expenses will remain the same
D)   A and B
E)   A, B, and C

Question 8

Long-term debt and equity should be

Accepted Answer

A)   The first items to include in creating pro forma statements because entrepreneurs have no control over debt and equity
B)   The last items to include in creating pro forma statements because entrepreneurs have more control over debt and equity compared to sales and expenses
C)   Part of the iterative process because entrepreneurs may have to change their business plan if debt and equity are limited
D)   A and B
E)   A, B, and C C

Question 9

The first step in creating pro forma financial statements is:

Accepted Answer

A)   sales forecasts
B)   expense forecast
C)   financing forecasts
D)   A and B
E)   A, B, and C

Question 10

Preparing pro forma financial statements requires at least:

Accepted Answer

A)   No iterations
B)   1 iteration
C)   2 iterations
D)   3 iterations
E)   4 iterations C

Exam 7: Pro Forma Financial Statements

When outside investors and lenders review a company's financial statements, they look for

Correct Answer
verified

Preparing sales forecast of a new business may require:

Correct Answer
verified

The worst case scenario will include:

Correct Answer
verified

In analyzing pro forma financial statements, you should include at the minimum:

Correct Answer
verified

Pro Forma financial statements include:

Correct Answer
verified

Since sales forecast is a critical element in preparing pro forma statement, entrepreneurs should be evaluated on

Correct Answer
verified
B

Methods for estimating expenses for an existing business include:

Correct Answer
verified

Long-term debt and equity should be

Correct Answer
verified
C

The first step in creating pro forma financial statements is:

Correct Answer
verified

Preparing pro forma financial statements requires at least:

Correct Answer
verified
C

Exam 7: Pro Forma Financial Statements

When outside investors and lenders review a company's financial statements, they look for

Correct AnswerverifiedShow Answer

Preparing sales forecast of a new business may require:

Correct AnswerverifiedShow Answer

The worst case scenario will include:

Correct AnswerverifiedShow Answer

In analyzing pro forma financial statements, you should include at the minimum:

Correct AnswerverifiedShow Answer

Pro Forma financial statements include:

Correct AnswerverifiedShow Answer

Since sales forecast is a critical element in preparing pro forma statement, entrepreneurs should be evaluated on

Correct AnswerverifiedB

Methods for estimating expenses for an existing business include:

Correct AnswerverifiedShow Answer

Long-term debt and equity should be

Correct AnswerverifiedC

The first step in creating pro forma financial statements is:

Correct AnswerverifiedShow Answer

Preparing pro forma financial statements requires at least:

Correct AnswerverifiedC

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
B

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified
C