Which of the Following Is the Preferred Method to Forecast

question 24

Multiple Choice

Which of the following is the preferred method to forecast the financing items on the balance sheet?

• A)Assume that debt and equity are constant.Sum all forecasted assets except excess cash,and all liabilities and existing debt and equity.Plug the model using newly issued debt or excess cash.
• B)Financing items should be forecasted first,taking into consideration the future funding needs of the company.Correspondingly,the assets that the raised capital will fund should then be adjusted.
• C)Assume that all liabilities and equity will grow at the same rate as revenue growth.
• D)Assume that debt and equity will grow at the same constant rate in all years going forward.

---

Definitions:

Continuous Random Variables

Variables that can take an infinite number of values within a given range.

Infinite

A term describing a quantity without bounds or end, often used in mathematics and physics.

Continuous Probability Distributions

Probability distributions in which the data can take infinitely many values within a given range.

Poisson Probability Distribution

A discrete probability distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space, assuming these events occur with a known constant mean rate and independently of the time since the last event.