17.On May 1, Vaya Corp. had a beginning cash balance of $175. Vaya’s sales for April were $430 and May sales were $480. During May, the firm had cash expenses of $110 and made payments on accounts payable of $290. Vaya’s accounts receivable period is 30 days. What is the firm’s beginning cash balance on June 1?
A. $145
B. $155
C. $205
D. $215
E. $265
18.You are preparing pro forma financial statements for 2014 using the percent-of-sales method. Sales were $100,000 in 2013 and are projected to be $120,000 in 2014. Net income was $5,000 in 2013 and is projected to be $6,000 in 2014. Equity was $45,000 at year-end 2012 and $50,000 at year-end 2013. Assuming that this company never issues new equity, never repurchases equity, and never changes its dividend payout ratio, what would be projected for equity at year-end 2014?
A. $55,000
B. $56,000
C. $60,000
D. Insufficient information is provided to project equity in 2014.
19.Please refer to Oscar’s financial statements above. What was Oscar’s increase in retained earnings during 2014?
A. $450
B. $1,380
C. $1,830
D. $2,280
E. None of the above.
20.Please refer to Oscar’s financial statements above. Sales are projected to increase by 3 percent next year. The profit margin and the dividend payout ratio are projected to remain constant. What is the projected addition to retained earnings for next year?
A. $1,309.19
B. $1,421.40
C. $1,884.90
D. $2,667.78
E. $3,001.40
F. None of the above.
21.Please refer to Oscar’s financial statements above. All of Oscar’s costs and current asset accounts vary directly with sales. Sales are projected to increase by 10 percent. What is the pro forma accounts receivable balance for next year?
A. $949
B. $1,034
C. $1,113
D. $1,730
E. $2,670
F. None of the above.
22.Please refer to Oscar’s financial statements above. Assume a constant profit margin and dividend payout ratio, and further assume all of Oscar’s assets and current liabilities vary directly with sales. Assume long-term debt and common stock remain unchanged. Sales are projected to increase by 10 percent. What is Oscar’s external financing need for next year?
A. -$410
B. -$260
C. $235
D. $1,320
E. $7,240
F. None of the above.
23.Please refer to Oscar’s financial statements above. Assume a constant debt-equity ratio, net profit margin and dividend payout ratio, and further assume all of Oscar’s expenses, assets and current liabilities vary directly with sales. What is the pro forma net fixed asset value for next year if sales are projected to increase by 7.5 percent?
A. $10,857.50
B. $10,931.38
C. $11,663.75
D. $15,587.50
E. $18,987.50
F. None of the above.
24.In the above financial statements, Royal Corporation has prepared (incomplete) pro forma financial statements for 2014, based on actual financial statements for 2013. Royal Corp. used the percent-of-sales method assuming a sales growth rate of 10% for 2014. If capital expenditures are planned to be $1,615 in 2014, then what would be the appropriate projection for net fixed assets in 2014?
A. $4,453
B. $4,563
C. $4,663
D. $5,663
25.Please refer to the pro forma financial statements for Royal Corporation above. If Royal Corporation plans to issue $100 in new equity in 2014, what should be the projection for shareholders’ equity for 2014?
A. $5,349
B. $5,436
C. $5,451
D. $5,536
26.Please refer to the pro forma financial statements for Royal Corporation above. Assume that net fixed assets are projected to be 5,000 for 2014 and that shareholders’ equity is projected to be 5,500 for 2014. If long-term debt is the plug figure, what should be the projection for long-term debt for Royal Corporation in 2014?
A. $2,206
B. $2,363
C. $2,455
D. $2,847
27.Please refer to the spreadsheet above. Selected assumptions are given for preparing pro forma financial statements for 2015. Which of the following formulas would correctly give the forecast for sales in cell C8?
A. =B8*B2
B. =B8 + B8*B2
C. =(1 + B8)*B2
D. =(1/B2)*B8
E. None of the above.
28.Please refer to the spreadsheet above. Selected assumptions are given for preparing pro forma financial statements for 2015. When the pro formas are completed, which of the following formulas would correctly give the forecast for cost of goods sold in cell C9?
A. =B9*B3
B. =B9 + B9*B3
C. =B8*B3
D. =B9*B2
E. None of the above.
29.Please refer to the spreadsheet above. Selected assumptions are given for preparing pro forma financial statements for 2015. Assume that no new equity will be issued in 2015. When the pro formas are completed, which of the following formulas would correctly give the forecast for shareholders’ equity in cell G19?
A. =F19*B2
B. =F19*(1 + B2)
C. =F19 + (1 – B4)*C16
D. =F19 + B4*C16
E. None of the above.
30.Which of the following statements is correct if a firm’s pro forma financial statements project net income of $12,000 and external financing required of $5,000?
A. Total assets cannot grow by more than $10,000.
B. Dividends cannot exceed $10,000.
C. Retained earnings cannot grow by more than $12,000.
D. Long-term debt cannot grow by more than $5,000.
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