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Fundamentals Of Corporate Finance Study Set 21

Business

Quiz 4 :

Long-Term Financial Planning and Corporate Growth

Quiz 4 :

Long-Term Financial Planning and Corporate Growth

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In most industries, planning beyond the period of one year is not very useful.
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True False
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Answer:

False

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Sales forecasts are a common element among financial planning models.
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True False
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Answer:

True

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Very few financial planning models require an externally supplied sales forecast.
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True False
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Answer:

False

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Financial planning is important because the only way for a firm to prosper is for it to grow.
True False
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A pro forma balance sheet must always maintain the current debt-equity ratio of a firm.
True False
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A pro forma income statement should consider both macroeconomic and industry forecasts.
True False
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With good financial planning, managers can be less vigilant in their day to day management of the firm.
True False
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A pro forma balance sheet should include consideration of the capacity level of the firm.
True False
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Pro forma statements are a common element among financial planning models.
True False
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By developing a financial plan, a firm benefits by being forced to focus on best case scenarios.
True False
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Asset requirements is a common element among financial planning models.
True False
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By developing a financial plan, a firm benefits by being forced to set goals and establish priorities.
True False
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Conventional wisdom holds that financial plans don't work, but financial planning does.
True False
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All else equal, the lower the forecast growth the larger the level of external financing needed.
True False
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The firm's investment and financing decisions are unrelated and should not be analyzed at the same time.
True False
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If total assets increase by the same percentage as sales increase it is likely assets and sales will increase by identical dollar amounts.
True False
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Pro forma statements should consider the dividend policy of the firm.
True False
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Financial planning helps investigate the linkages between goals and the different aspects of a firm's business.
True False
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Aggregation refers to the process by which a firm first projects its aggregate investment requirement, then it breaks that total up and allocates it to the investment proposals of the firm's smaller units.
True False
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By developing a financial plan, a firm benefits by being forced to think about and forecast the future.
True False
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