Projected financial statements can be used to assess the sensitivity of all of the following except:
a firm's liquidity
a firm's leverage to changes in assumptions
conditions under which the firm's debt covenants may become binding
unusual patterns for projected total assets.
As a firm progresses through the introduction life-cycle stage, what type of flexible account will it be more likely to use to balance the balance sheet?
dividends.
growth related assets.
issued equity.
stock buy-backs.
All of the following statements are true regarding ratios and forecasts except:
Ratios cannot confirm whether forecast assumptions will turn out to be correct.
Ratios can tell whether future sales growth was accurately captured.
Ratios cannot tell whether assumptions about future cash flows are realistic.
Ratios can tell whether growth rates for sales are consistent with past sales growth performance.
6. All of the following are the fundamental bases for future payoffs to equity shareholders and share value except: (Points : 3)
earnings
cash flows
dividends
depreciation
If a firm competes in a capital-intensive industry with excess capacity, all of the following are true except:(Points : 3)
price increases will be less likely.
price increases will be more likely.
companies in competitive industries face high exit barriers.
companies in competitive industries may experience future price decreases.
As a firm progresses through the growth life-cycle stage, what kind of flexible account will it be more likely to use to balance the balance sheet?
issued debt.
paying down of debt.
dividends
stock buy-backs.