You are getting ready to prepare pro forma statements for your business. Which one of the following are you most apt to estimate first as you begin this process?

  • sales forecast
Which one of the following statements concerning financial planning for a firm is correct?
  • Financial plans often contain alternative options based on economic developments.
The sustainable growth rate of a firm is best described as the:
  • maximum growth rate achievable excluding any external equity financing while maintaining a constant debt-equity ratio.
The internal growth rate of a firm is best described as the:
  • maximum growth rate achievable excluding external financing of any kind.
Which one of the following ratios identifies the amount of assets a firm needs in order to generate $1 in sales?
  • capital intensity ratio
Which one of the following correctly defines the retention ratio?
  • addition to retained earnings divided by net income
Which one of the following terms is defined as dividends paid expressed as a percentage of net income?
  • dividend payout ratio

Which one of the following terms is applied to the financial planning method which uses the projected sales level as the basis for determining changes in balance sheet and income statement account values?

  • percentage of sales method

Atlas Industries combines the smaller investment proposals from each operational unit into a single project for planning purposes. This process is referred to as which one of the following?

  • Aggregation

Phil is working on a financial plan for the next three years. This time period is referred to as which one of the following?

  • planning horizon