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3 years ago

Overview of financial planning

Business

1 answer:

VMariaS [17]3 years ago

6 0

Answer:

1. Operating plan.

2. Operating plan.

3. Financial plan.

4. Dividend policy.

5. B and C.

Explanation:

1. Operating plan: provides detailed implementation guidance for a firm's operations, as well as a forecast of the company's expected future free cash flows.

2. Operating plan: provides the inputs necessary for a risk management evaluation using sensitivity analysis, scenario analysis, or simulations.

3. Financial plan: Is based on knowledge of the amount of funds necessary to compensate the firm's shareholders, and the mix of debt and equity capital used to finance the firm.

4. Dividend policy: sets forth specific targets for cash or share distributions to the firm's shareholders.

Capital structure: describes specific targets for the mix of debt and equity used to finance a firm.

Financial planning can be defined as the process of estimating the amount of capital required for the smooth operations of the business and determine how to achieve the firm's set goals and objectives.

Hence, the following statements are true about financial planning;

I. Once a firm's forecasted financial statements are prepared, the firm must determine how much capital it will need to support these plans.

II. Management must monitor operations after implementing a financial plan to detect deviations from the plan and adjust accordingly.

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If Congress passes a plan to cut the national debt in half, then:

Alenkasestr [34]

Answer:

3) AD shifts right and output would decrease.

Explanation:

Aggregate demand (AD) is the total number of goods demanded in an economy in a period of time.

If Congress decides to cut the National debt (or accumulated debt of the government) by half, this will make interest rates lower and will encourage investment from the private sector.

The shifting to the right occurs when these components; consumption spending and investment spending increases due to cut in National debt.

The AD curve will shift back to the left as these components decreases.

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2 years ago

4) Double-declining-balance depreciation: A) is an accelerated depreciation method. B) ignores the residual value in computing d

Oxana [17]

Answer:

Option D is correct.

Explanation:

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4 0

3 years ago

Garden Sales, Inc, sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has

muminat

Answer:

Garden Sales, Inc.

April May June Total

1. Cash Collections:

Cash sales (20%) $92,000 $198,000 $88,000 $378,000

Credit sales:

10% month of sale 36,800 79,200 35,200 151,200

70% month following sale 123,200 257,600 554,400 935,200

20% second month following 25,600 35,200 73,600 134,400

Total cash collections $277,600 $570,000 $751,200 $1,598,800

2. Merchandise Inventory:

a. Purchases Budget April May June

Cost of goods sold 322,000 693,000 308,000

Ending inventory (15%) 103,950 46,200 35,700

Goods available for sale 425,950 739,200 343,700

Beginning inventory 84,000 103,950 46,200

Purchases 341,950 635,250 297,500

b. Cash payment for purchases:

50% month of purchase 170,975 317,625 148,750 637,350

50% month following purchase 126,000 170,975 317,625 614,600

Total payment for purchases $296,975 $488,600 $466,375 $1,251,950

3. Cash Budget

April May June Total

Beginning cash balance $46,000 $40,225 $40,425 $46,000

Total cash collections 311,200 652,800 727,600 $1,691,600

Cash available $357,200 $693,025 $768,025 $1,737,600

Payment for purchases $296,975 $488,600 $466,375 $1,251,950

Other payments:

Dividends 24,000 24,000

Land purchase 32,000 32,000

Selling & administrative exp. 115,000 134,000 73,400 322,400

Total cash payments $435,975 $654,600 $539,775 $1,630,350

Cash Balance (78,775) 38,425 228,250 228,250

Minimum Cash balance (40,000) (40,000)

Cash required $118,775 $1,575 0 0

Cash borrowed $119,000 $2,000 (123,400) (123,400)

Ending balance 40,225 40,425 104,850 104,850

4. To: The President

From: FC

Subject: Revised Estimates and the Cash Budget

Date: April 26, 2021

The revised estimates will ensure that the company has the ability to pay off its borrowings in April and May by the end of the second quarter.

It should be maintained.

Regards,

Explanation:

a) Data and Calculations:

Budgeted monthly absorption costing income statements for April-July are:

April May June July

Sales $460,000 $990,000 $440,000 $340,000

Cost of goods sold 322,000 693,000 308,000 238,000

Gross margin 138,000 297,000 132,000 102,000

Selling and administrative expenses *

Selling expense 89,000 94,000 55,000 34,000

Administrative expense 42,000 56,000 34,400 32,000

Total selling and administrative

expenses 131,000 150,000 89,400 66,000

Net operating income $7,000 $147,000 $42,600 $36,000

April May June July

Sales $460,000 $990,000 $440,000 $340,000

Credit sales (80%) 368,000 792,000 352,000 272,000

Cash collections

Cash sales (20%) $92,000 $198,000 $88,000 $68,000

Credit sales:

10% month of sale 36,800 79,200 35,200 27,200

70% month following sale 123,200 257,600 554,400 246,400

20% second month following 25,600 35,200 73,600 158,400

Total cash collections $277,600 $570,000 $751,200 $500,000

April May June July

Cost of goods sold 322,000 693,000 308,000 238,000

Ending inventory (20%) 138,600 61,600 47,600

Goods available for sale 460,600 754,600 355,600

Beginning inventory 64,400 138,600 61,600 47,600

Purchases 396,200 616,000 294,000

Cash payment for purchases:

50% month of purchase 198,100 308,000 147,000

50% month following purchase 93,800 198,100 308,000

Total payment for purchases $291,800 $506,100 $455,000

Other payments:

Dividends 24,000

Land purchase 32,000

Selling & administrative exp. 115,000 134,000 73,400

Total cash payments $430,800 $672,100 $528,400

Principal debt to bank at the end of the quarter = $121,000

+ Interests: 1% of $119,000 = $1,190

1% of $121,000 1,210

Total interest owed $2,400 2,400

Total debt to the bank at the end of the quarter = $123,400

Revised Estimates:

Credit sales (80%) 368,000 792,000 352,000 272,000

Cash collections

Cash sales (20%) $92,000 $198,000 $88,000 $378,000

Credit sales:

25% month of sale 92,000 198,000 88,000 378,000

65% month following sale 114,400 239,200 514,800 868,400

10% second month following 12,800 17,600 36,800 67,200

Total cash collections $311,200 $652,800 $727,600 $1,691,600

April May June July

Cost of goods sold 322,000 693,000 308,000 238,000

Ending inventory (15%) 103,950 46,200 35,700

Goods available for sale 425,950 739,200 343,700

Beginning inventory 84,000 103,950 46,200

Purchases 341,950 635,250 297,500

Cash payment for purchases:

50% month of purchase 170,975 317,625 148,750

50% month following purchase 126,000 170,975 317,625

Total payment for purchases $296,975 $488,600 $466,375

Other payments:

Dividends 24,000

Land purchase 32,000

Selling & administrative exp. 115,000 134,000 73,400

Total cash payments $435,975 $654,600 $539,775

5 0

3 years ago

During February, $186,500 was paid to creditors on account, and purchases on account were $201,400. Assuming the February 28 bal

Kobotan [32]

Answer:

Accounts payable (opening) = $ 45000.

Account rec during year = $464570

Cash payment during year = $351570.

Explanation:

As we know that:

Account payable (open) + Purchases - Accounts payable(end) = Paid cash

Accounts payable (open) + 201400-59900= 186500

Accounts payable (open)= 186500+59900-201400

= $45000.

As we know that:

Account receivables (open) + A/c receivable during year - A/c receivable (end)=Cash collected.

A/c receiable during period= 449600-115800+130770

= $464570.

As we know that:

Cash (open) + Cash collected - Cash (end)= Cash payment during period.

46200+248600 - 56770 = Cash payments during year.

Cash payment during year = $351570.

4 0

3 years ago

Suppose investment spending increases by $50 billion and as a result the equilibrium income increases by $200 billion. the value

iren [92.7K]

<span>The marginal propensity to consume (MPC) is the the change in consumption divided by change in income. Where change in in consumption = $50B and change in income = $200B. So we have 50/200 =1/4 = 0.25. So the MPC is $250M</span>

8 0

3 years ago