Which of the Following Statements Is True of Financial Forecasts

question 63

Multiple Choice

Which of the following statements is true of financial forecasts in the financial planning process?

• A) The forecast of money the firm needs is estimated by adding the increases in assets and spontaneous liabilities and subtracting the operating income.
• B) The projected balance sheet method of forecasting financial needs requires only a forecast of the firm's balance sheet.
• C) The projected balance sheet method forces recognition of the fact that new financing creates additional financial obligations.
• D) The projected balance sheet method of forecasting financial needs does not consider dividends paid out to shareholders as these are after tax payments from retained earnings.
• E) Financing feedback describes the effect on the firm's stock price of the announcement that the firm will sell new equity or debt to raise the needed capital on its stock price.

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Definitions:

Type B Misfires

Misfires in an engine that happen under specific conditions or times, potentially indicating a sporadic or intermittent problem.

Emissions-Threatening

Pertaining to substances or activities that pose a risk to air quality by releasing harmful pollutants.

Catalyst-Damaging

Pertaining to substances or conditions that can degrade or impair the function of a catalytic converter, which is an emissions control device in vehicles.

DTC

Diagnostic Trouble Codes, codes generated by a vehicle's onboard diagnostics system to indicate a problem.