Financial Management

Chapter 4 Financial Planning and Forecasting Financial Statements ANSWERS TO SELECTED END-OF-CHAPTER QUESTIONS 4-1 a. The absorb plan provides detailed implementation guidance designed to lessen upon corporate objectives. It enlarge who is responsible for what particular function, and when special(prenominal) tasks nuclear number 18 to be accomplished. Many companies use an operational plan which spans a 5- year period, and hence is called the five-year plan. b. The fiscal plan details the pecuniary aspects of the confederacys operating plan. In summing up to an analysis of the households current financial condition, the financial plan commonly includes a gross revenue view, the detonator budget, the cash budget, pro forma financial dictations, and the external financing plan. c. A gross sales forecast is still the forecast of unit and horse sales for some afterlife period. Of course, a lot of movement is required to produce a good sales forecast. Genera lly, sales forecasts are based on the recent trend in sales plus forecasts of the economical prospects for the nation, industry, region, and so forth. The sales forecast is critical to good financial planning. d. With the percent of sales anticipation method, many items on the income statement and balance sheets are sham to increase proportionally with sales.

As sales increase, these items that are level(p) to sales also increase, and the set of these items for a particular year are estimated as percentages of the forecasted sales for that year. e. Funds are impromptu generated if a liability a ccount increases orally (a utomatically) as sales increase. An increase! in a liability account is a bloodline of bills, thus funds have been generated. Two examples of spontaneous liability accounts are accounts collectible and accrued wages. Note that notes payable, although a current liability account, is not a spontaneous source of funds since an increase in notes payable requires a specific action between the smashed and a creditor. f. The percentage of...If you extremity to get a amply essay, order it on our website: OrderCustomPaper.com

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