EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 4, Problem 3QTD
Summary Introduction
To discuss: Method of Percentage of sales
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1. Discuss the other types of forecasting methods that financial analysts use to predict future revenues.
2. Are there any several other factors that may need to be considered that affects the sales forecast?
If a sales increase is forecasted, how will it affect expenses on the pro forma income statement if market conditions are expected to remain stable
How is the the financial ratio analyses very useful?
Chapter 4 Solutions
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- Between horizontal and vertical analysis which do you think is better to use when analyzing an income statement and why? When a promise or order to pay unconditional? Explainarrow_forwardWhat advantages does the forecasted financial statement method have over theAFN equation for forecasting financial requirements?arrow_forwardWhat methods could be used in profit planning? How do we use profit planning in financial risk management?arrow_forward
- When preparing a projected income statement, which of the following additional information, other than the financial statements would probably not be relevant? a) Expected capital expenditure b) The competitive environment c) New versus old store mix d) Expected level of macroeconomic activityarrow_forwardCould you please discuss the limitations of financial ratio analysisarrow_forwardWhich of the following is not a common tool used in financial statement analysis? Group of answer choices a) Credit analysis b) Common-size statement analysis c) Ratio analysis d) Random walk analysisarrow_forward
- When is the forecasted growth rate in residual operating income the same as the forecasted growth rate in sales? Kindly answer the question with introduction and conclusion based on the concept of the question. Explain the answer properly considering the accounting aspect of it.arrow_forwardThe underlying assumptions of technical analysis are that A.price move in predictable patterns B. Market value is determined by market news C. Investors are rationalarrow_forward1.What value can the price-sales ratio provide to financial managers that the price-earnings ratio cannot? 2. In general, what does a high Tobin's Q value indicate and how reliable does that value tend to be?arrow_forward
- Comment on the following statements with suitable example: i. The ratio return on assets has net income in the numerator and total assets in the denominator. Explain how each part of the ratio could cause return on assets to fall. ii. Explain how return on assets could decline, given an increase in net profit margin. iii. If quoted market prices are not available, a personal financial statement cannot be prepared. Comment.arrow_forwardWhich of the following would increase risk? a. Raise the level of working capital b. Increase the amount of equity financing c. Increase the amount of short term borrowing d. Decrease the amount of inventory by formulating an effective inventory policyarrow_forwardWho is responsible fir underlying determinants of future profitability? 1. Credit Analyst 2. Fundamental analyst 3. System Analyst 4. Technical Analyst Please provide an accurate answer.arrow_forward
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