Question

In: Finance

1.True or False. The internal growth rate of a firm is best described as the growth...

1.True or False. The internal growth rate of a firm is best described as the growth rate at which the firm can grow by using internally generated funds and issuing debt only.

2. You are getting ready to prepare pro forma statements for your business. Which one of the following are you most apt to estimate first as you begin this process?

A. Need for additional fixed assets.

B. Current fixed costs.

C. Projected sales.

D. Desired net income.

3. Which one of the following statements is correct?

A. Book values should always be given precedence over market values.

B. Financial statements are frequently used as the basis for performance evaluations.

C. Reviewing financial information over time has very limited value.

D. Potential lenders place little value on financial statement information.

4. In terms of financial planning, it is as important to plan for the worst-case scenario as it is to plan to the best-case scenario.

A.True

B.False

5. Financial planning accomplishes which of the following for a firm?

I.Determination of asset requirements.

II. Development of contingency plans.

III. Establishment of priorities.

IV. Analysis of funding options.

Solutions

Expert Solution

The internal growth rate of a firm is best described as the growth rate at which the firm can grow by using internally generated funds and issuing debt only.

Answer : False

Internal growth rate is maximum growth rate achievable without issuing more stock (equity) or debt..

2. You are getting ready to prepare pro forma statements for your business. Which one of the following are you most apt to estimate first as you begin this process?

Answer : C. Projected sales.

3. Which one of the following statements is correct?

Answer : C. Reviewing financial information over time has very limited value.

4. In terms of financial planning, it is as important to plan for the worst-case scenario as it is to plan to the best-case scenario.

Answer : A.True

Financial planning accomplishes which of the following for a firm?

I.Determination of asset requirements.

II. Development of contingency plans.

III. Establishment of priorities.

IV. Analysis of funding options.

Answer : All of the above

jeff jeffy answered 3 hours ago

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