FIN 300 Sadusky Final Exam ASU || Questions and Correct Detailed
Answers
Financial Planning correct answers The identification of the kinds of projects that a firm needs to
undertake and the ways of financing those projects
Financial Plan correct answers -Integrates the firm's basic plans into a single planning document
with a detailed budget
-Typically, the plan extends over a three-to-five year period called a planning horizon
Strategic Plan correct answers Process by which management establishes the firm's long-term
goals
-describes the vision of the firm
What issues does the strategic plan identify? correct answers -Line of business the firm will
compete in
-Capital expenditures
-Acquisitions and new lines of business
-Mergers, alliances, and divestitures that many happen in the near future
The Financing Plan correct answers Based on the list of necessary assets prepared in the capital
budget, management now needs to decide how to fund them
What areas does The Financing Plan indicate? correct answers -States the external funding
needed
-States the desired capital structure for the firm
-Establishes the firm's payout policy ratio
Sales Forecast correct answers the most important input for developing a financial planning
model
, Sales forecast formula correct answers (next years sales-current years sales)/current years sales
Financial Planning Model correct answers A set of equations that generate projected financial
statements
Inputs into the Financial Planning Model correct answers -The current financial statements
-The sales forecast
-Investment policy decisions
-Financial policy decisions
Percent of Sales Model correct answers A simple financial planning model that assumes that
most income and balance sheet accounts vary proportionally with sales
Pro Forma Financial Statements correct answers -It is assumed that the financial statement
accounts vary directly with changes in sales•
-With the given information, projected sales and projected costs are calculated, and thus the
projected net income•
-The projected values for the balance sheet accounts are also similarly calculated
A Better Financial Planning Model correct answers -Takes a more realistic approach in its
assumptions, unlike the percent of sales model
-Not all balance sheet and income statement items vary directly with sales
-All variable costs and most current assets and current liabilities vary directly with sales
Dividend Payout Ratio correct answers Measures the percentage of net income paid out as
dividends to shareholders
Answers
Financial Planning correct answers The identification of the kinds of projects that a firm needs to
undertake and the ways of financing those projects
Financial Plan correct answers -Integrates the firm's basic plans into a single planning document
with a detailed budget
-Typically, the plan extends over a three-to-five year period called a planning horizon
Strategic Plan correct answers Process by which management establishes the firm's long-term
goals
-describes the vision of the firm
What issues does the strategic plan identify? correct answers -Line of business the firm will
compete in
-Capital expenditures
-Acquisitions and new lines of business
-Mergers, alliances, and divestitures that many happen in the near future
The Financing Plan correct answers Based on the list of necessary assets prepared in the capital
budget, management now needs to decide how to fund them
What areas does The Financing Plan indicate? correct answers -States the external funding
needed
-States the desired capital structure for the firm
-Establishes the firm's payout policy ratio
Sales Forecast correct answers the most important input for developing a financial planning
model
, Sales forecast formula correct answers (next years sales-current years sales)/current years sales
Financial Planning Model correct answers A set of equations that generate projected financial
statements
Inputs into the Financial Planning Model correct answers -The current financial statements
-The sales forecast
-Investment policy decisions
-Financial policy decisions
Percent of Sales Model correct answers A simple financial planning model that assumes that
most income and balance sheet accounts vary proportionally with sales
Pro Forma Financial Statements correct answers -It is assumed that the financial statement
accounts vary directly with changes in sales•
-With the given information, projected sales and projected costs are calculated, and thus the
projected net income•
-The projected values for the balance sheet accounts are also similarly calculated
A Better Financial Planning Model correct answers -Takes a more realistic approach in its
assumptions, unlike the percent of sales model
-Not all balance sheet and income statement items vary directly with sales
-All variable costs and most current assets and current liabilities vary directly with sales
Dividend Payout Ratio correct answers Measures the percentage of net income paid out as
dividends to shareholders
