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:

Peanut Butter

A food paste or spread made from ground dry roasted peanuts.

Explanandum

The phenomenon or event that is being explained in a scientific inquiry.

Hypotheses

Tentative explanations or suppositions made based on limited evidence as a starting point for further investigation.

Arguments

A series of statements typically used to persuade someone of something or to present reasons for accepting a conclusion.