Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) Perhaps the most important step when developing forecasted financial statements is to determine the breakdown of common equity between common stock and retained earnings.
• B) The first,and perhaps the most critical,step in forecasting financial requirements is to forecast future sales.
• C) Forecasted financial statements,as discussed in the text,are used primarily as a part of the managerial compensation program,where management's historical performance is evaluated.
• D) The capital intensity ratio gives us an idea of the physical condition of the firm's fixed assets.
• E) The AFN equation produces more accurate forecasts than the forecasted financial statement method,especially if fixed assets are lumpy and economies of scale exist.

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Definitions:

Anticipation

The action of expecting or predicting something to happen in the future.

Reward

Reward refers to a benefit or positive reinforcement given in response to someone's action or behavior, used to increase the likelihood of the behavior's occurrence in the future.

Infatuation

An intense but short-lived passion or admiration for someone or something.

Passion

Intense, driving, or overmastering feeling or conviction towards an activity, object, or concept that is deeply loved or valued.