REVIEW MATERIALS FOR FINAL EXAM

Financial Forecasting (Chapter 15)

1. The typical outline of the component parts of a business plan would be the
A. mission and strategy statements. C. financial projections.
B. operations of the business. D. All of the above.

2. Planning for future growth is called:

A. capital budgeting C. financial forecasting
B. working capital management D. none of the above

3. The ideal financial planning process would be

A. top-down planning.
B. bottom-up planning.
C. a combination of top-down and bottom-up planning.
D. none of the above.

4. Which of the following is incorrect regarding the construction of financial planning models?
A. There is no theory or model that leads straight to the optimal financial strategy.
B. Financial planning should not proceed by trial and error.
C. Many different strategies may be projected under a range of assumptions about the future before one strategy
is finally chosen.
D. The dozens of separate projections that may be made during this trial-and-error process generate a heavy
load of arithmetic and paperwork.

5. Common sources of short-term financing include:

A. Stretching payables C. Reducing inventory
B. Issuing bonds D. All of the above

6. TNC Gaming Company had the following data:

Cash 75,000 Current liabilities 22,000
Accounts Receivable 50,000 Bonds payable 225,000
Fixed assets 300,000 Equity 178,000
425,000 425,000
TNC Gaming company forecasted to increase its sales by 20%, the fixed assets are fully utilized. Current assets and
liabilities are all spontaneous. The firm will also retain 30,000 of the next year’s earnings. Compute for the additional
financing needed.
A. 50,600 C. 90,400
B. 70,800 D. 80,000
7. PSD. LGD. Gaming Company is planning to increase its sales by 15%, the increase in sales would increase its total
assets by 80,000, the spontaneous liabilities amounting to 70,000 will also increase. The pay-out ratio is 70% of the
net income. The company had a net income of 80,000. How much would be the required funds needed?
A. 30,200 C. 80,000
B. 45,500 D. 79,300

Budgeting (Chapter 16)

8. OG Company had sales budget for the year:

Quarter 1 = 500 units
Quarter 2 = 250 units
Quarter 3 = 300 units
Quarter 4 = 150 units
Selling price per unit is Php 120. 40% of the total sales during the quarter is for cash while the remaining 60% is sold
on credit. For credit transaction, 70% is collected during the quarter where sales happened while the remaining is
collected the following month after the sales. How much is the total received on Quarter 2?
A. 36,200 C. 40,450
B. 38,900 D. 35,400

9. Liquid Company’s management had been deciding for the total production of goods for the first quarter of CY 2019.
The following policies have been consensually determined during the meeting:
 The sales need per sales budget is 25,000 units for the first quarter and 30,000 for the second quarter
 Ending Inventory is 25% of the next quarter’s sales need.
How much would be the 1st Quarters budgeted production?
A. 28,470 units C. 26,250 units
B. 52,870 units D. 30,000 units

Cash Conversion Cycle ( Chapter 17)

10. Evil Genuises a manufacturing firm, had the following data:

Days Inventory Outstanding 36
Days Sales outstanding 24
Days Payable Outstanding 19

What is the company’s operating cycle?

A. 60 days C. 79 times
B. 60 times D. 41 days

What is the Cash Conversion Cycle?

A. 60 days C. 79 times
B. 60 times D. 41 days
11. Dowtah toh Corporation had the following data for the current year 2019:
 Sales (40% is on cash) 10,000,000
 Accounts Receivable, beginning 2,500,000
 Accounts Receivable, end 1,500,000
 Cost ratio 55% of sales
 Inventory , 2018 1,250,000
 Inventory, 2019 1,500,000
 Average Accounts Payable 2,500,000
 Credit Purchases 75% of total purchases
What is the total cash conversion cycle?

A. 53 days C. 60 days
B. 58 days D. 68 days