Which of the Following Statements Is Correct

question 75

Multiple Choice

Which of the following statements is correct?

• A) Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in assets and spontaneous liabilities and subtracting operating income.
• B) The projected balance sheet method of forecasting financial needs requires only a forecast of the firm's balance sheet.Although a forecasted income statement helps clarify the financing needs,it is not essential to the balance sheet method.
• C) Because dividends are paid after taxes from retained earnings,dividends are not included in the projected balance sheet method of forecasting.
• D) The projected balance sheet method forces recognition of the fact that new financing creates additional financial obligations.For instance,new financing can increase expenses which can actually decrease taxes but increase the projected financial need.
• 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 needed capital.

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Definitions:

Trivers-Willard Hypothesis

A theory suggesting that parents are likely to have offspring of the sex that will give them the greatest number of surviving grandchildren under certain conditions.

Sex Manipulation

Strategies or behaviors by which organisms influence the sex ratio of their offspring for evolutionary or ecological advantages.

Parental Conflict

A theory in evolutionary biology that predicts conflict between the evolutionary interests of parents over the allocation of parental resources.