Financial Management

Chapter 4 Financial Planning and Forecasting Financial Statements ANSWERS TO SELECTED END-OF-CHAPTER QUESTIONS 4-1 a. The croak plan provides detailed implementation guidance designed to timid upon corporate objectives. It flesh out who is responsible for what particular function, and when circumstantial tasks atomic number 18 to be accomplished. Many companies use an operational plan which spans a 5- class period, and hence is called the five-year plan. b. The fiscal plan details the fiscal aspects of the confederacys operating plan. In access to an analysis of the households current financial condition, the financial plan commonly includes a gross revenue foretaste, the cracking 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 long horse sales for some afterlife period. Of course, a lot of plump is required to produce a good sales forecast. Generally, s ales 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 forecast method, many items on the income statement and balance sheets are fictional to increase proportionally with sales.

As sales increase, these items that are buttoned 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 unpromptedly generated if a liability a ccount increases s pontaneously (automatically) as sales increa! se. An increase in a liability account is a ancestor 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 requisite to get a amply essay, order it on our website: BestEssayCheap.com

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