Enp11
total revenue and total costs
When using the graphic approach to break-even analysis, the entrepreneur must plot which of the following?
zero.
When using the internal rate of return method, the future cash flows are discounted at a rate that makes the net present value equal to
five
When using trend line analysis, how many periods are required?
cash
Which is not included within balance sheet ratios?
Horizontal analysis
_____ looks at financial statements and ratios over time.
it pulls together all the information presented in other segments of the business.
Financial information is important to entrepreneurs because:
the number of units that must be produced in order to meet the sales forecast.
For a manufacturing firm, the production budget represents
it is a way to anticipate conditions.
From an entrepreneur's standpoint, preparing financial statements is useful because
fixed cost; variable cost
In handling questionable costs, the cost in question is substituted first as a _____ and then as a _____.
operating budget.
A budget that is a statement of estimated income and expenses over a specified period of time is referred to as an
does not change in response to changes in activity for a given period of time.
A fixed cost
a material purchases budget
A manufacturing firm needs to establish which of the following budgets?
10
An inventory turnover ratio of 9.81 means that the average dollar volume of inventory is used up almost _____ times during the fiscal year
expected product profitability.
Break-even analysis is used to assess
how many projects, in total, should be selected.
Capital budgeting is designed to show
ratio analysis.
Comparing financial numbers in order to make decisions is referred to as:
it is very simple to use in comparison with other methods.
Despite the drawbacks of the payback method, the entrepreneur should continue to use it because
sales revenue.
Loan proceeds are not directly tied to
vertical and horizontal
Ratio analysis can be applied from which of the following directions?
maximize the value of the firm.
The principle objective of capital budgeting is to
complex.
The process of preparing a pro forma balance sheet is _____.
cost of capital.
The rate used to adjust future cash flows to determine their value in present period terms is the
assets = liabilities + owners' equity.
The traditional accounting equation that verifies the accuracy of the entrepreneur's balance sheet is
the last balance sheet prepared before the budget period began
Which of the following are needed in preparing a pro forma balance sheet?
cash
Which of the following balance sheet ratios measure solvency?
The product should not be profitable if expected sales do not exceed the lower break-even point.
Which of the following is a decision rule for handling questionable costs?
preparation of the sales forecast
The first step in constructing an operating budget is
internal rate of return.
A method that discounts future cash flows at a rate that makes the net present value of the project equal to zero is known as
changes in the same direction and in direct proportion to changes in operating activity.
A variable cost
the sum of the desired ending inventory and the number of units to be sold.
In the production budget for a manufacturing firm, the number of units needed in inventory is determined by
the dependent variable
In the simple linear regression analysis equation, Y = a + bx, Y represents
the slope of the line.
In the simple linear regression analysis equation, Y = a + bx, b represents
capital investments.
Investments in which returns are expected to extend beyond one year are referred to as
goods purchased on account.
The cash flow does not come from
a dollar today is worth more than a dollar in the future.
The concept of the net present value method works on the premise that
(SP - VC) S - FC
The contribution margin approach formula is
identification and timing of cash inflows.
The first step in the preparation of the cash-flow budget is the
estimate operating expenses.
The last step in preparing the operating budget is to
twelve
How many months of the year should be illustrated in the first pro forma income statement?
more favorable in its short-term effects on earnings.
Many companies continue to use the payback method. It is
a trend line analysis.
More established ventures will use a sales forecast model where the estimation of current sales will increase a certain percentage over the prior period's sales. This percentage is based upon
recognizing future cash flows beyond the payback period.
Net present value method is a capital budgeting technique that helps to minimize some of the shortcomings of the payback method by
an operating budget.
One type of budget used by the entrepreneur is
They are complex
Which of the following is not a common characteristic of financial statements?
anticipated change in net income method
Which of the following is not one of the most common methods used in capital budgeting?
They do not necessarily correlate with information from other parts of the business.
Which of the following statements is not true about financial assumptions?
the payback method.
One of the easiest capital budgeting methods to understand is
