1. The most significant portions of your projection are, no matter how carefully

Question

1. The most significant portions of your projection are, no matter how carefully contrived, still little more than educated guesses.         

TRUE

FALSE

2. Where assets have been projected to grow at a rate faster than liabilities and equity, the plug figure may be a notes payable.              

TRUE

FALSE

3. There are three distinct steps in developing pro forma statements. Which of the following is not one of those steps?

A. qualitative analysis

B. quantitative analysis

C. corporate analysis

D. testing critical assumptions

4. One of the qualitative factors that impacts the industry is an industry maturity and profit trends.             

TRUE

FALSE

5. In a quantitative analysis, accuracy diminishes with the length of time projected.

TRUE

FALSE

6. The final and perhaps most crucial portion of financial forecasting is to test the assumptions that were used to derive the projection.

TRUE

FALSE

7. The single most significant item in a financial projection is

A. inventory.

B. accounts receivable

C. sales

D. accounts payable

E. none of the above

8. In a quantitative analysis, time horizons are of limited importance.          

TRUE

FALSE

9. If projected assets exceed liabilities and owners' equity, it is assumed that the difference is funded through stock issuance.            

TRUE

FALSE

Explanation / Answer

1.F

2.F

3.A

4.T

5.T

6.T

7.C

8.F

9.F

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