What does the capital budget focus on?

Determining the assets needed and how they will be financed

What is the primary role of financial ratios in business finance?

To summarize financial information and provide context

Why is forecasting future financial performance considered complicated?

It involves making assumptions about future events

What does the cash budget help manage?

Day-to-day operational cash flow

Why is a business plan important for investors?

It convinces investors that the company will be successful

What is sensitivity analysis used for in financial planning?

To examine the impact of different assumptions on financial outcomes

What is the primary purpose of a business plan?

To outline goals and strategies for achieving those goals

What are pro forma financial statements?

Forecasts of future financial performance

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Fin 303 (Business Plan)

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Questions 11

Answers

1
What does the capital budget focus on?
Managing working capital
Predicting future sales
Determining the assets needed and how they will be financed
Evaluating the financial ratios of the company
2
What is the primary role of financial ratios in business finance?
To determine tax obligations
To forecast interest rates
To predict future stock prices
To summarize financial information and provide context
3
Which of the following is a component of a business plan?
Cash flow statement
Strategic plan
Historical performance analysis
Debt repayment schedule
4
The capital budget focuses on forecasting sales, while financial ratios only consider past performance.
False
True
5
Why is forecasting future financial performance considered complicated?
It involves detailed knowledge of marketing strategies
It relies solely on past performance data
It requires knowledge of industry standards
It involves making assumptions about future events
6
What does the cash budget help manage?
Day-to-day operational cash flow
Forecasting future sales
Equity and debt financing
Long-term capital investments
7
Why is a business plan important for investors?
It provides a detailed analysis of financial ratios
It provides market research results
It lists the company's expenses and profits
It convinces investors that the company will be successful
8
What is sensitivity analysis used for in financial planning?
To examine the impact of different assumptions on financial outcomes
o determine how much revenue a company will generate
To forecast market trends
To estimate the future cost of goods sold
9
What is the primary purpose of a business plan?
To outline goals and strategies for achieving those goals
To forecast future earnings
To provide historical financial data
To assess market risk
10
Which financial statement reflects a company's assets, liabilities, and equity?
Cash budget
Income statement
Pro forma statement
Balance sheet
11
What are pro forma financial statements?
Adjusted financial statements for tax purposes
Forecasts of future financial performance
Statements that reflect the company’s past performance
Reports on past sales figures

Fin 303 (Business Plan) Flashcards | StudBud