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49. If a firm with an asset base of $3 million recently added $150,000 to retained earnings
after a dividend payment of $100,000, then its internal growth rate is:
50. What is the maximum internal growth rate for a firm reporting net income of $500,000, a
dividend payout ratio of 40%, and total assets of $10 million?
51. What is the required asset turnover for a firm with a 12% profit margin, 50% equity, and a
40% dividend payout that wishes to grow at 6% without increasing financial leverage?
52. What is the maximum dividend payout ratio consistent with not requiring external funds
for a firm with an ROE of 15%, a debt-equity ratio of 40%, and an annual sales growth objective of
9%?
53. Which one of the following will decrease the internal growth rate, other things equal?
54. What is the sustainable growth rate for a firm with net income of $2.5 million, cash
dividends of $1.5 million, and return on equity of 18%?
55. The sustainable rate of growth assumes the:
56. What amount of debt should a firm include in its financing mix in order to achieve a
sustainable growth rate of 9% while maintaining a 40% dividend payout, a 10% profit margin, and
an asset turnover of 1.5?
57. A firm has sales of $1.2 million, a profit margin of 5%, and a dividend payout ratio of 25%.
How much will be added to retained earnings next year if sales increase by 6%?
58. Financial plans covering a short planning horizon rarely extend beyond:
59. If the projected growth rate is smaller than the firm's sustainable growth rate:
60. Contingency planning is:
61. A major difference between financial planning and forecasting is that financial planning:
62. A firm has current sales of $2.4 million and fixed assets of $1.65 million. The firm is
currently operating at 88% of capacity. How high can the firm's sales go without requiring any
additional fixed assets?
63. The flexibility of financial plans is evident in the extent that:
64. Dawson Metals is currently operating at 94% of its capacity and has sales of $3.1 million
and fixed assets of $2.8 million. How much should the firm budget for fixed asset purchases if
sales are projected to increase by 9% next year?
65. The outputs of a financial planning model often include:
66. Planners have determined that sales will increase by 20% next year, and the profit margin
will remain at 10% of sales. Which one of the following statements is correct if the payout ratio
remains at 30%?
67. How will a percentage of sales model treat cost of goods sold if sales revenues are
expected to grow by 20% to $1 million next year? Cost of goods sold will:
68. A firm's goal is to maintain a 75% debt-equity ratio. How much equity would be required if
the results of a financial planning model indicate that the firm's assets will grow to $4 million?
69. Over the long-term, firms that maintain a constant debt-equity ratio over a variable
business cycle may find that:
70. The final variable to have its value determined in a financial plan is often referred to as
the:
71. Which one of the following is most apt to occur if a financial plan shows sources of funds
to be $100,000 and uses of funds to be $90,000?
72. Increased needs for net working capital are:
73. How much is required in external financing if first-stage pro forma statements indicate $1
million in net income, $300,000 in dividends, and a $900,000 increase in total assets?
74. Which one of the following is correct when a firm's pro forma statements project a net
income of $5,000 and an external financing requirement of $2,000?
75. First-stage pro forma balance sheets do not determine:
76. The rate at which the assets of a firm can grow without the requirement of any external
sources of financing is the:
77. Which one of the following statements is correct concerning the internal growth rate?
78. Which one of the following changes will
decrease
a firm's internal growth rate?
79. Under which one of the following capital structures will a firm's internal growth rate
exceed its sustainable growth rate?
80. Which effort will help a firm boost its internal growth rate?
81. Which one of the following statements is correct for a firm that has a sustainable growth
rate that exceeds its projected growth rate in assets?
82. The sustainable growth rate:
83. What is the sustainable growth rate for a firm with $250,000 in net income, $20,000 in
preferred stock dividends, $80,000 in common stock dividends, and an average equity balance of
$1 million?
