Test 1

effective long-range planning

A commonly cited reason for financial failure is a lack of

future

A financial plan looks at what needs to be done in the ----

partnership, limited

A limited liability company is taxed like a ----- and its owners have ---- liability

unlimited

A sole proprietor has ----- personal liability for all business debts and obligations.

Depreciation

A systematic expensing of an asset based on the asset's estimated life

increase

An increase in a firm's total asset turnover will ------ the sustainable growth rate.

Assets Equation

Assets = Liabilities + Stockholders' Equity

Product Costs

Contain both fixed and variable costs, reported as costs of goods sold

fixed commitments

Costs that do not change in the short run arise because of ------

twelve

Current assets are defined as assets that can be turned into cash within ----- months

cash

Future value is the ------ value of an investment at some time in the future

not an appropriate goal

Growth, by itself, is:

Degree of Financial Leverage (DFL)

Measures the percentage change in earnings per share over the percentage change in EBIT. Measure of the sensitivity of EPS to changes in EBIT as a result of changes in debt.

Compound

More money can be earned with -------- interest with simple interest.

Current Assets

Net working capital plus current liabilities equal-----.

Profitability

ROE is a measure of ------.

needed investment

The aggregation process determines the total

Tax reporting, Financial accounting

The controller is responsible for which of the following tasks?

ease and practically

The main advantage of the percentage of sales approach to producing pro forma statements is:

Sales forecast, Pro Forma Statements, Economic Assumptions

What are some of the common elements of a financial planning model?

Sales figure

When constructing a pro forma income statement, the first step is to supply:

a sales figure

When constructing a pro forma income statement, the first step is to supply:

market

Whenever------ information is available, it should be used instead of accounting data.

controller and treasurer

Which of the following positions generally report to the chief financial officer (CFO)?

shareholders

Who is entitled to the residual value of a firm's cash flow's?

Total Assets

a common-size balance sheet expresses accounts as a percentage of _____

Generally Accepted Accounting Principles (GAAP)

a set of accounting standards that is used in the preparation of financial statements

dividend policy

the amount of cash the firm pays out to shareholders is the firms:

leverage

the degree of financial ------ the firm determines the amount of borrowing of the firm

Sustainable Growth Rate

the maximum growth rate a firm can achieve without external equity financing while maintaining a constant debt-equity ratio

Capital Structure

the mixture of debt and equity maintained by a firm

Discounting

the opposite of compounding

Capital Budgeting

the process of planning and managing a firm's investment opportunities