finc620 week 3 quiz

	Which of the following is NOT a key element in strategic planning as it is described in the text?

· Question 2

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2 out of 2 points


	A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to increase?

· Question 3

2 out of 2 points


	Which of the following is NOT one of the steps taken in the financial planning process?

· Question 4

2 out of 2 points


	Spontaneous funds are generally defined as follows:

· Question 5

2 out of 2 points


	Which of the following statements is CORRECT?

· Question 6

2 out of 2 points


	Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)?

· Question 7

2 out of 2 points


	Which of the following statements is CORRECT?

· Question 8

2 out of 2 points


	Last year Wei Guan Inc. had $350 million of sales, and it had $270 million of fixed assets that were used at 65% of capacity. In millions, by how much could Wei Guan’s sales increase before it is required to increase its fixed assets?

· Question 9

2 out of 2 points

Clayton Industries is planning its operations for next year, and Ronnie Clayton, the CEO, wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year? Dollars are in millions.

Last year’s sales = S₀	$350	Last year’s accounts payable	$40
Sales growth rate = g	30%	Last year’s notes payable	$50
Last year’s total assets = A₀*	$500	Last year’s accruals	$30
Last year’s profit margin = PM	5%	Target payout ratio	60%

· Question 10

2 out of 2 points


	Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its FA/Sales ratio was 40%. However, its fixed assets were used at only 75% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level it would have had had it been operating at full capacity. What target FA/Sales ratio should the company set?

· Question 11

2 out of 2 points

Howton & Howton Worldwide (HHW) is planning its operations for the coming year, and the CEO wants you to forecast the firm’s additional funds needed (AFN). The firm is operating at full capacity. Data for use in the forecast are shown below. However, the CEO is concerned about the impact of a change in the payout ratio from the 10% that was used in the past to 50%, which the firm’s investment bankers have recommended. Based on the AFN equation, by how much would the AFN for the coming year change if HHW increased the payout from 10% to the new and higher level? All dollars are in millions.

Last year’s sales = S₀	$300.0	Last year’s accounts payable	$50.0
Sales growth rate = g	40%	Last year’s notes payable	$15.0
Last year’s total assets = A₀*	$500.0	Last year’s accruals	$20.0
Last year’s profit margin = PM	20.0%	Initial payout ratio	10.0%

· Question 12

2 out of 2 points


	Which of the following statements is CORRECT?

· Question 13

2 out of 2 points


	The term “additional funds needed (AFN)” is generally defined as follows:

· Question 14

2 out of 2 points


	Last year Emery Industries had $450 million of sales and $225 million of fixed assets, so its FA/Sales ratio was 50%. However, its fixed assets were used at only 65% of capacity. If the company had been able to sell off enough of its fixed assets at book value so that it was operating at full capacity, with sales held constant at $450 million, how much cash (in millions) would it have generated?

· Question 15

2 out of 2 points


	Last year Handorf-Zhu Inc. had $850 million of sales, and it had $425 million of fixed assets that were used at only 60% of capacity. What is the maximum sales growth rate the company could achieve before it had to increase its fixed asset

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