Financial Management

Chapter 4 Financial mean and Forecasting Financial Statements ANSWERS TO SELECTED END-OF-CHAPTER QUESTIONS 4-1 a. The command plan provides detailed death penalty guidance designed to lighthearted upon corporate objectives. It dilate who is responsible for what particular function, and when precise tasks atomic number 18 to be accomplished. Many companies use an in operation(p) plan which spans a 5- stratum period, and therefrom is called the five-year plan. b. The fiscal plan details the monetary aspects of the confederacys operating plan. In accessory to an analysis of the households current financial condition, the financial plan commonly includes a gross revenue account, the corking budget, the cash budget, pro forma financial dictations, and the external financing plan. c. A gross gross sales forecast is tranquil the forecast of unit and vaulting horse sales for some future period. Of course, a lot of thrash is required to produce a good sales forecast. Generally, sales forecasts are based on the recent trend in sales plus forecasts of the efficient prospects for the nation, industry, region, and so forth. The sales forecast is critical to good financial planning. d. With the percent of sales prediction method, many items on the income avouchment and balance sheets are pretended to increase proportionally with sales.

As sales increase, these items that are even to sales also increase, and the institute of these items for a particular year are estimated as percentages of the forecasted sales for that year. e. Funds are ad libitum generated if a liability a ccount increases unbiddenly (automatically) as sales increase. An increase in a liability account is a seed of bills, thus coin have been generated. Two examples of spontaneous liability accounts are accounts due and accrued wages. Note that notes payable, although a current liability account, is not a spontaneous source of funds since an increase in notes payable requires a specific action between the arch and a creditor. f. The percentage of...If you indigence to get a extravagantly essay, order it on our website: Ordercustompaper.com

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