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Exam 4: Cash Flow and Financial Planning

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Question 31

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Which of the following is an example of noncash charges?

A) depreciation
B) accruals
C) interest expense
D) dividends paid

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Question 32

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During 2015,NICO Corporation had EBIT of $100,000,a change in net fixed assets of $400,000,an increase in net current assets of $100,000,an increase in spontaneous current liabilities of $400,000,a depreciation expense of $50,000,and a tax rate of 30%.Based on this information,NICO's free cash flow is ________.

A) -$630,000
B) -$50,000
C) $650,000
D) -$30,000

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Question 33

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An internal forecast is based on ________.

The key input to any cash budget is ________.

Non-cash charges are expenses that involve an actual outlay of cash during the period but are not deducted on the income statement.

The key outputs of the short-term financial planning process are the ________.

A firm has projected sales in May,June,and July of $100,$200,and $300,respectively.The firm makes 20 percent of sales for cash and collects the balance one month following the sale.The firm's total cash receipts in July is ________.

Table 4.1 True Sandpaper Co. Balance Sheets For the Years Ended 2014 and 2015 -The firm may have increased long-term debts to finance ________.(See Table 4.1)

Table 4.2 Magna Fax, Inc. Balance Sheet For the Years Ended December 31, 2014 and 2015 -The credit manager at First National Bank has just received the income statement and balance sheet for Magna Fax,Inc.for the year ended December 31,2015.(See Table 4.2.)The bank requires the firm to report its earnings performance and financial position quarterly as a condition of a loan agreement.The bank's credit manager must prepare two key financial statements based on the information sent by Magna Fax,Inc.This will be passed on to the commercial loan officer assigned to this account,so that he may review the financial condition of the firm. (a)Prepare a statement of retained earnings for the year ended December 31,2015. (b)Prepare a summary of cash inflows and cash outflows for the year ended December 31,2015. (c)Prepare a statement of cash flows for the year ended December 31,2015,organized by cash flow from operating activities,cash flow from investment activities,and cash flow from financing activities.

A firm plans to depreciate a five year asset in the next planning period.The statements that will be directly affected are the ________.

A firm's final sales forecast is usually a function of ________.

The net fixed asset investment (NFAI)is defined as the change in net fixed assets plus depreciation.

Table 4.3 The financial analyst for Sportif, Inc. has compiled sales and disbursement estimates for the coming months of January through May. Historically, 75 percent of sales are for cash with the remaining 25 percent collected in the following month. The ending cash balance in January is $3,000. -The net cash flow for February is ________.(See Table 4.3)

Table 4.8 Balance Sheet Wirl Wind Company -One basic weakness of the simplified pro forma approaches lies in the assumption that certain variables,such as cash,accounts receivable,and inventories,can be forced to take on certain "desired" values.

In the month of August,a firm had total cash receipts of $10,000,total cash disbursements of $8,000,depreciation expense of $1,000,a minimum cash balance of $3,000,and a beginning cash balance of $500.The ending cash balance for August totals ________.

Table 4.3 The financial analyst for Sportif, Inc. has compiled sales and disbursement estimates for the coming months of January through May. Historically, 75 percent of sales are for cash with the remaining 25 percent collected in the following month. The ending cash balance in January is $3,000. -The firm has a total financing requirement of ________ for the period from February through May.(See Table 4.3)

Table 4.3 The financial analyst for Sportif, Inc. has compiled sales and disbursement estimates for the coming months of January through May. Historically, 75 percent of sales are for cash with the remaining 25 percent collected in the following month. The ending cash balance in January is $3,000. -The ending cash balance for March is ________.(See Table 4.3)

Business firms are permitted to systematically charge a portion of the market value of fixed assets as depreciation against annual revenues.

Under the basic MACRS procedures,the depreciable value of an asset is its full cost,including outlays for installation.

Table 4.1 True Sandpaper Co. Balance Sheets For the Years Ended 2014 and 2015 -Common stock dividends paid in 2015 amounted to ________.(See Table 4.1)