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42.
The financial planning process:
I. involves internal negotiations among divisions.
II. quantifies senior manager's goals.
III. considers only internal factors.
IV. reconciles company activities across divisions.
43.
A Procrustes approach to financial planning is based on:
44.
Fresno Salads has current sales of $6,000 and a profit margin of 6.5
percent. The firm estimates that sales will increase by 4 percent next year
and that all costs will vary in direct relationship to sales. What is the pro
forma net income?
45.
Wagner Industrial Motors, which is currently operating at full capacity, has
sales of $29,000, current assets of $1,600, current liabilities of $1,200, net
fixed assets of $27,500, and a 5 percent profit margin. The firm has no long-
term debt and does not plan on acquiring any. The firm does not pay any
dividends. Sales are expected to increase by 4.5 percent next year. If all
assets, short-term liabilities, and costs vary directly with sales, how much
additional equity financing is required for next year?
46.
The Cookie Shoppe expects sales of $437,500 next year. The profit margin
is 5.3 percent and the firm has a 30 percent dividend payout ratio. What is
the projected increase in retained earnings?
47.
Gladsden Refinishers currently has $21,900 in sales and is operating at 45
percent of the firm's capacity. What is the full capacity level of sales?
48.
The Corner Store has $219,000 of sales and $193,000 of total assets. The
firm is operating at 87 percent of capacity. What is the capital intensity ratio
at full capacity?
49.
Miller Bros. Hardware is operating at full capacity with a sales level of
$689,700 and fixed assets of $468,000. The profit margin is 7 percent. What
is the required addition to fixed assets if sales are to increase by 10
percent?
50.
Designer's Outlet has a capital intensity ratio of 0.92 at full capacity.
Currently, total assets are $48,900 and current sales are $51,200. At what
level of capacity is the firm currently operating?
51.
Monika's Dinor is operating at 94 percent of its fixed asset capacity and has
current sales of $611,000. How much can the firm grow before any new
fixed assets are needed?
52.
Stop and Go has a 4.5 percent profit margin and an 18 percent dividend
payout ratio. The total asset turnover is 1.6 and the debt-equity ratio is 0.45.
What is the sustainable rate of growth?
53.
R. N. C., Inc. desires a sustainable growth rate of 4.5 percent while
maintaining a 40 percent dividend payout ratio and a 6 percent profit
margin. The company has a capital intensity ratio of 1.23. What equity
multiplier is required to achieve the company's desired rate of growth?
54.
A firm has a retention ratio of 45 percent and a sustainable growth rate of
6.2 percent. The capital intensity ratio is 1.2 and the debt-equity ratio is
0.64. What is the profit margin?
55.
Frasier Cabinets wants to maintain a growth rate of 5 percent without
incurring any additional equity financing. The firm maintains a constant
debt-equity ratio of .0.55, a total asset turnover ratio of 1.30, and a profit
margin of 9.0 percent. What must the dividend payout ratio be?
56.
Cross Town Express has sales of $137,000, net income of $14,000, total
assets of $98,000, and total equity of $45,000. The firm paid $7,560 in
dividends and maintains a constant dividend payout ratio. Currently, the
firm is operating at full capacity. All costs and assets vary directly with
sales. The firm does not want to obtain any additional external equity. At
the sustainable rate of growth, how much new total debt must the firm
acquire?
57.
The Two Sisters has a 9 percent return on assets and a 75 percent
retention ratio. What is the internal growth rate?
58.
The Dog House has net income of $3,450 and total equity of $8,600. The
debt-equity ratio is 0.60 and the payout ratio is 30 percent. What is the
internal growth rate?
59.
What is Major Manuscripts, Inc.'s retention ratio?
60.
Major Manuscripts, Inc. does not want to incur any additional external
financing. The dividend payout ratio is constant. What is the firm's
maximum rate of growth?
