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    CF - HW - Chapter 4

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    Châu Nguyễn Thị Minh
    This document summarizes a homework assignment on long-term financial planning from a corporate finance chapter. It includes 10 multiple choice questions testing concepts like the plowback ratio, financial planning process, pro forma financial statements, and calculating internal and sustainable growth rates. It also includes 3 short answer questions calculating a company's estimated financing needs (EFN) based on sales forecasts and capacity utilization, as well as determining the sustainable growth rate.

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    CF - HW - Chapter 4

    Uploaded by

    Châu Nguyễn Thị Minh
    49 views3 pages
    This document summarizes a homework assignment on long-term financial planning from a corporate finance chapter. It includes 10 multiple choice questions testing concepts like the plowback ratio, financial planning process, pro forma financial statements, and calculating internal and sustainable growth rates. It also includes 3 short answer questions calculating a company's estimated financing needs (EFN) based on sales forecasts and capacity utilization, as well as determining the sustainable growth rate.

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    This document summarizes a homework assignment on long-term financial planning from a corporate finance chapter. It includes 10 multiple choice questions testing concepts like the plowback ratio, financial planning process, pro forma financial statements, and calculating internal and sustainable growth rates. It also includes 3 short answer questions calculating a company's estimated financing needs (EFN) based on sales forecasts and capacity utilization, as well as determining the sustainable growth rate.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views3 pages

    CF - HW - Chapter 4

    Uploaded by

    Châu Nguyễn Thị Minh
    This document summarizes a homework assignment on long-term financial planning from a corporate finance chapter. It includes 10 multiple choice questions testing concepts like the plowback ratio, financial planning process, pro forma financial statements, and calculating internal and sustainable growth rates. It also includes 3 short answer questions calculating a company's estimated financing needs (EFN) based on sales forecasts and capacity utilization, as well as determining the sustainable growth rate.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    Corporate Finance

    Homework
    Chapter 4: Long-term Financial Planning

    I. Multiple choices:

    1. The plowback ratio is………


    A. equal to net income divided by the change in total equity.
    B. the percentage of net income available to the firm to fund future growth.
    C. equal to one minus the retention ratio.
    D. the change in retained earnings divided by the dividends paid.
    2. Financial planning………
    A. focuses solely on the short-term outlook for a firm.
    B. is a process that firms employ only when major changes to a firm's operations are
    anticipated.
    C. is a process that firms undergo once every five years.
    D. considers multiple options and scenarios for the next upcoming years.
    3. Arrange the following steps involved in the process of financial planning according to
    the percentage of sales approach in the correct sequence.
    A. Estimation of expected cost, Preparation of a sales forecast, Preparation of pro forma
    financial statements.
    B. Preparation of a sales forecast, Preparation of pro forma financial statements, Estimation
    of expected profit.
    C. Preparation of a sales forecast, Estimation of expected profit, Preparation of pro forma
    financial statements.
    D. Preparation of pro forma financial statements, Estimation of expected profit, Preparation
    of a sales forecast.

    4. Financial plans generally tend to ignore which one of the following?


    A. Dividend policy
    B. Manager's goals and objectives
    C. Risks associated with cash flows
    D. Operating capacity levels

    5. Which one of the following statements is correct?


    A. Pro forma statements must assume that no new equity is issued.
    B. Pro forma statements are projections, not guarantees.
    C. Pro forma statements are limited to a balance sheet and income statement.
    D. Pro forma financial statements must assume that no dividends will be paid.
    6. Sales can often increase without increasing which one of the following?
    A. Accounts receivable
    B. Fixed assets
    C. Accounts payable
    D. Cost of goods sold
    7. HP company currently has 21.9 billion VND in sales and is operating at 45% of the
    firm's capacity. What is the full capacity level of sales?
    A. 31.755 billion VND
    B. 36.250 billion VND
    C. 48.667 billion VND
    D. 51.333 billion VND

    8. Binh An Corp. has a 12% return on assets (ROA) at the ending of the period and a 70%
    retention ratio. What is its internal growth rate?
    A. 6.23%
    B. 7.24%
    C. 9.17%
    D. 9.84%
    9. Hoa Binh Corp. has a 22% return on equity (ROE) at the ending of the period and a
    77% retention ratio. What is its sustainable growth rate?
    A. 18.68%
    B. 19.25%
    C. 19.49%
    D. 20.39%
    10. The internal growth rate of a firm is best described as the……….growth rate
    achievable ………. external financing of any kind.
    A. minimum; including
    B. maximum; including
    C. maximum; excluding
    D. minimum; excluding
    II. Short answer

    The income statement & balance sheet of Company X in 2022 are as follow:

    Questions:
    a. Calculate the EFN if sales are forecasted to increase by 10% in 2023. Assume the company is
    operating at full capacity and the dividend payout ratio is fixed.
    b. Based on the above information, what is the EFN in 2023 if net fixed asset utilization is 60%
    capacity?
    c. Without external funding, how much growth can the company sustain in 2023? What is the
    sustainable growth rate the company could achieve in 2023?

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