Case 8-1 As the Senior Accountant for a Manufacturing Company, You Have

question 90

Multiple Choice

Case 8-1
As the senior accountant for a manufacturing company, you have many years experience working with Excel and often provide help and tips on using Excel to the company's more junior accountants.
-This morning June, a junior accountant who works in the budgeting area, sends you an e-mail. She is preparing a manufacturing expenses forecast for the next five years based on the data from current year and the previous four years. She asks if Excel has a tool that can help her with forecasting forward five years. In your reply e-mail, you suggest to June that she can ____.

• A) ask Lou, in fixed assets accounting, because you have no idea what Excel tool would be useful
• B) create a chart based on the five years' available data and then add an appropriate trendline to the chart to predict values beyond the available data
• C) create a new worksheet in her workbook, copy the actual data to the new worksheet, and then use slicers to forecast forward five years
• D) just increment each year's forecasted expenses by ten percent; that should give forecasted values that will be close enough

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds.

Capital Structure

The composition of a company's funding, including debt, equity, and other financial instruments, which defines how a company finances its overall operations and growth.

Debt

Money that is owed or due to be paid, typically resulting from borrowing funds to be repaid with interest.

Financial Leverage

Financial leverage is the use of borrowed money (debt) to amplify the potential returns from an investment or project.