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FIN 3715 (17)
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Chapter 4

Finance Chapter 4 - Long Term Financial Planning And Growth

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Department
Finance
Course
FIN 3715
Professor
All Professors
Semester
Fall

Description
Chapter 04LongTerm Financial Planning and GrowthChapter 04LongTerm Financial Planning and GrowthMultiple Choice Questions 1 Phil is working on a financial plan for the next three years This time period is referred to as which one of the following A financial rangeB planning horizonC planning agendaD shortrunE current financing period 2 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 A conjoiningB aggregationC conglomerationD appropriationE summation 3 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 A percentage of sales methodB sales dilution methodC sales reconciliation methodD commonsize methodE trend method 41Chapter 04LongTerm Financial Planning and Growth4 Which one of the following terms is defined as dividends paid expressed as a percentage of net income A dividend retention ratioB dividend yieldC dividend payout ratioD dividend portionE dividend section 5 Which one of the following correctly defines the retention ratio A one plus the dividend payout ratioB addition to retained earnings divided by net incomeC addition to retained earnings divided by dividends paidD net income minus additions to retained earningsE net income minus cash dividends 6 Which one of the following ratios identifies the amount of assets a firm needs in order to generate 1 in sales A current ratioB equity multiplierC retention ratioD capital intensity ratioE payout ratio 7 The internal growth rate of a firm is best described as the A minimum growth rate achievable assuming a 100 percent retention ratioB minimum growth rate achievable if the firm maintains a constant equity multiplierC maximum growth rate achievable excluding external financing of any kindD maximum growth rate achievable excluding any external equity financing while maintaining a constant debtequity ratioE maximum growth rate achievable with unlimited debt financing 42Chapter 04LongTerm Financial Planning and Growth8 The sustainable growth rate of a firm is best described as the A minimum growth rate achievable assuming a 100 percent retention ratioB minimum growth rate achievable if the firm maintains a constant equity multiplierC maximum growth rate achievable excluding external financing of any kindD maximum growth rate achievable excluding any external equity financing while maintaining a constant debtequity ratioE maximum growth rate achievable with unlimited debt financing 9 You are developing a financial plan for a corporation Which of the following questions will be considered as you develop this planI How much net working capital will be neededII Will additional fixed assets be requiredIII Will dividends be paid to shareholdersIV How much new debt must be obtained A I and IV onlyB II and III onlyC I III and IV onlyD II III and IV onlyE I II III and IV 10 Financial planning A focuses solely on the shortterm outlook for a firmB is a process that firms employ only when major changes to a firms operations are anticipatedC is a process that firms undergo once every five yearsD considers multiple options and scenarios for the next two to five yearsE provides minimal benefits for firms that are highly responsive to economic changes 43
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