Chapter 09 Prospective Analysis Multiple Choice Questions 1. When preparing a projected income statement, which of the following additional information, other then the financial statements would probably not be relevant? A. The competitive environment B. New versus old store mix C. Expected capital expenditure D. Expected level of macroeconomic activity 2. The reliability of a short-term cash forecast depends most heavily on the quality of: A. Cost of goods sold forecast
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changes into your books and records. (Note: You need to demonstrate to the lender/investor that you have recognized possible changes to GAAP that may impact the accounting and reporting of your accounting events.) 3. Prepare a pro forma balance sheet and income statement providing the assumptions made and support the valuations assigned. 4. Considering the value of assets (assigned per your balance sheet) used within your business, recommend two (2) specific internal controls that you will
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Hampton Machine Tool Company, a profitable machine tool manufacturer, is trying to renew a 1 million dollar loan due September 30, 1979 until December 31, 1979. Through examination of the case, it is clear that Hampton will be unable to repay the loan; however, at first glance Hampton seems to be a profitable company that would be able to pain the loan on time and would not need more bank financing. Unfortunately, that is not the case. Hampton, by making a stock repurchase for which the loan was
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in excess inventory. Money was stuck up in inventory. Instead of analyzing the problem and addressing the root cause, company considered it as cash problem and tried to solve the problem by having progressively larger line of credit. But increasing the line of credit could not solve the problem. When banks demanded payment, severity of the issue came to the attention of the owners of Reeds Clothier. Now they are trying to analyzing financial problem and finding solution. Q. Calculate a few ratios
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Assignment 2: You Are an Entrepreneur Student: Peter M. Burke Instructor: Dr. Muhammad Sumadi ACC557: Financial Accounting November 18, 2012 Introduction When I was about two years old, my grandfather took me on my first of many fishing trips to a small lake near his house. When his grandchildren visited, we all went along with him. He gave each of us our own special fishing poles, and he taught us everything about fishing, from how to set up our poles to how to bait our hooks, and eventually
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You Are an Entrepreneur! ACC 557 Abstract Being a full time working mom with a house, husband and grad school to attend to, it does not give me a great deal of free time to pursue my lifetime goal of opening up my own day care center. Today, I have decided to turn that goal into a business finally with the support of my friends and family. However, I do need to obtain start-up capital from a lender or from an investor. My goal is to properly convince the lender or investor
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In this essay I will write about corporate budgeting system and why companies should make it carefully. To begin with I'd like to explain what does «budget» mean. A budget (from old French bougette, purse) is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending.[1] A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational
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decisions to increase sales to make profits. The contents of the paper will examining Sensitivity Analysis, Weighted Average Cost of Capital (WACC), multiple valuation techniques in reducing risks, calculate NPV for future cash flows and work out pro forma cash flow budget for the next five years for the organization and analyze the companies projected earnings (UOP, 2009). Analysis of Different Alternatives Guillermo has three available alternatives to evaluate the furniture store. First
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College of Business Administration University of Pittsburgh Capital Budgeting: Investment Criteria BUSFIN 1030 Introduction to Finance Capital Budgeting Decisions Examples of decisions addressed: 1. What products should the firm sell? 2. In what markets should the firm compete? 3. What new products should the firm introduce? Roles of managers: 4. Identify and invest in products and business acquisitions that will maximize the current market value of equity
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Management Simulation Analysis (B): Utilizing pro-forma balance sheets revealed that I was too conservative in my initial approach. My market share was 98% in the traveler series but dismal in the workhorse line. My decision to invest $400,000 into a certificate of deposit was a critical error. I should have opened an office in Europe sooner to maintain market share. Pro-forma financial statements are critical to determine the outcome of previous decisions
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