44. The financial funds needed to acquire assets necessary to support a firm’s sales growth is called:
a. spontaneously generated funds
b. additional funds needed
c. addition in retained earnings
d. financial capital needed
45. A sales growth rate based on the retention of profits is referred to as the:
a. sustainable sales growth rate
b. spontaneous sales growth rate
c. nominal sales growth rate
d. weighted average sales growth rate
46. A firm projects net income to be $500,000, intends to pay out $125,000 in dividends, and had $2 million of equity at
the beginning of the year. The firm’s sustainable growth rate is:
a. 5.50%
b. 18.75%
c. 6.25%
d. 4.69%
47. Determine a venture’s sustainable growth rate based on the following information: sales = $1,000,000; net income =
$150,000; common equity at the end of last year = $520,000; and dividend payout percentage = 20%.
a. 16%
b. 20%
c. 24%
d. 30%
48. If beginning-of-period common equity is $200,000 and end-of-period common equity is $300,000, the sustainable
growth rate is:
a. 33%
b. 40%
c. 50%
d. 67%
49. Which of the following is a forecasting method used to project financial statements?
a. percent-of-sales method
b. percent-of-expenses method
c. return on equity method
d. additional funds needed method
50. Which of the following is not a step in forecasting sales for a seasoned firm?
a. forecast future growth rates based on possible scenarios and the probabilities of those scenarios
b. attempt to corroborate the projected sales growth rates with industry growth rates and the firm’s own past market
share
c. refine the sales forecast by using the sales force as a direct contact with both existing and potential customers
d. consider the effects of changes in the firm’s debt/equity blend on the sales forecasts