Finance 534 Week 8 Quiz 7

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Finance 534 week 8 quiz 7This quiz consist of 30 multiple choice questions. The first 15 questionscover the materialinChapter 12. The second 15 questions cover the material in Chapter 13. Be sure you are in thecorrect Chapterwhen you take the quiz.Question 1Last year Godinho Corp. had $250 million of sales, and it had $75 million of fixed assets thatwere being operated at 80% of capacity.In millions, how large could sales have been if thecompany had operated at full capacity?Correct Answer:$312.5Question 2Which of the following is NOT a key element in strategic planning as it is described in the text?Correct Answer:The statement of cash flows.Question 3Spontaneous funds are generally defined as follows:CorrectAnswer:Funds that arise out of normal business operations from its suppliers,employees, and the government, and they include immediate increases inaccounts payable, accrued wages, and accrued taxes.Question 4Which of the following statements is CORRECT?CorrectAnswer:The first, and perhaps the most critical, step in forecasting financialrequirements is to forecast future sales.Question 5

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Which of the following statements is CORRECT?CorrectAnswer:Additional funds needed (AFN) are typically raised using a combination of notespayable, long-term debt, and common stock.Such funds are non-spontaneous inthe sense that they require explicit financing decisions to obtain them.Question 6Which of the following statements is CORRECT?CorrectAnswer:The sustainable growth rate is the maximum achievable growth rate without thefirm having to raise external funds.In other words, it is the growth rate at whichthe firm's AFN equals zero.Question 7The capital intensity ratio is generally defined as follows:Correct Answer:The amount of assets required per dollar of sales, or A0*/S0.Question 8A company expects sales to increase during the coming year, and it is using the AFN equation toforecast the additional capital that it must raise.Which of the following conditions would causethe AFN to increase?Correct Answer:The company increases its dividend payout ratio.Question 9Which of the following statements is CORRECT?CorrectAnswer:A negative AFN indicates that retained earnings and spontaneous liabilities arefar more than sufficient to finance the additional assets needed.Question 10

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