18_____ Which of the following is a well-stated financial objective a . Increase earnings per share by 15% annually. b . Gradually boost market share from 10% to 15% over the next several years. c . Achieve lower costs than any other industry competitor. d . Boost revenues by a percentage greater than the industry average. e Achieve a differential advantage over others

18_____ Which of the following is a well-stated financial objective a . Increase earnings per share by 15% annually. b . Gradually boost market share from 10% to 15% over the next several years. c . Achieve lower costs than any other industry competitor. d . Boost revenues by a percentage greater than the industry average. e Achieve a differential advantage over others

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

Problem 3QE

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Which of the following is the best example of a well-stated financial objective? A) Increase market share by 3% annually for the next 3 years. B) Gradually boost market share from 10% to 15% over the next several years. C) Boost revenues by a percentage greater than the industry average. D) Achieve lower costs than any other industry competitor. E) Increase earnings per share by 15% annually.
Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its products from those of its competitors. Because of this strategy, you project that next year the firm will generate 6.0% revenue growth from price increases and 3.0% revenue growth from sales volume increases. Assume that the firms production cost structure involves strictly variable costs. (That is, the cost to produce each unit of product remains the same.) Should you project that the firms gross profit will increase next year? If you project that the gross profit will increase, is the increase a result of volume growth, price growth, or both? Should you project that the firms gross profit margin (gross profit divided by sales) will increase next year? If you project that the gross profit margin will increase, is the increase a result of volume growth, price growth, or both?
The best example of a well-stated, specific financial objective is to increase ROA (return on asset) by 0.5 percent annually. maximize total company profits and return on investment. achieve lower costs than any other industry competitor. gradually boost market share from 10 percent to 15 percent over the next several years.
17 The Manning Company has financial statements as shown next, which are representative of the company's historical average. The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company's need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales. Sales Expenses Earnings before interest and taxes Interest Earnings before taxes Taxes Earnings after taxes Dividends. Income Statement: Cash Accounts receivable. Inventory Fixed assets Assets Current assets Total assets The firm $230,000 168,500 $ 61,500 9,500 $ 52,000 17,500 $ 34,500 $ 13,800 Balance Sheet Liabilities and Stockholders' Equity $6,500 42,000 Accrued wages 55,000 Accrued taxes $ 103,500 90,000 Accounts payable Current liabilities Notes payable Long-term debt Common stock Retained…
An unlevered firm perceives its optimal dividend policy to be a 40 percent payout ratio. Asset turnover is sales/assets = 80%, the profit margin is 10 percent, and the firm has a target growth rate of 5%. a. Is the firm's target growth rate consistent with it other goals? b. If not, how much does it need to increase asset turnover to achieve it goals? c. How much would it need to increase the profit margin instead?
A corporation that is a single product firm is predicting that a price increase next year will cause unit sales to decrease. What effect would this price increase have on the following items for next year? A) B) C) D) Contribution Margin Ratio Increase Decrease Increase Decrease Multiple Choice Break-even Point Decrease Decrease No effect No effect
9. Which of the following strategy enables a manager to report a higher current ratio? Select one: a. Pay off accounts payable prior to year-end b. Purchase more fixed assets c. Purchase more fixed income securities d. Invest more in long term debt
Sustainable Growth Rate The Raindrop Company has an ROE of 12.1 percent and a payout ratio of 25 percent.a. What is the company’s sustainable growth rate?b. Can the company’s actual growth rate be different from its sustainable growth rate? Why or why not?c. How can the company increase its sustainable growth rate?
4.1 Calculating EFN Based on the following information for the Skandia Mining Company, what is EFN if sales are predicted to grow by 10 percent? Use the percentage of sales approach and assume the company is operating at full capacity. The payout ratio is constant. Income Statement Sales Costs Taxable income Taxes (34%) Net income Dividends Addition to retained earnings $4,250.0 3,875.0 $ 375.0 127.5 $ 247.5 $82.6 164.9 SKANDIA MINING COMPANY Financial Statements Assets Current assets Net fixed assets Total assets Balance Sheet $ 900.0 2,200.0 $3,100.0 Liabilities and Owners' Equity Current liabilities Long-term debt Owners' equity Total liabilities and owners' equity 4.2 EFN and Capacity Use Based on the information in Problem 4.1, what is EFN, assuming 60 percent capacity usage for net fixed assets? Assuming 95 percent capacity? 4.3 Sustainable Growth Based on the information in Problem 4.1, what growth rate can Skandia maintain if no external financing is used? What is the…
which one is correct please confirm? QUESTION 7 A firm that has a 2.5 DOL (degree of operating leverage) would find that an 8% increase in EBIT would result from a ____ increase in sales. a. 3.2% b. 5.4% c. 20.0% d. 2.0%
38 If the investment turnover increased by 30% and ROS decreased by 20%, the Residual Income woulda. Increase by 4%b. Increase by 6%c. Increase by 30%d. None of these
Return on investment is often expressed as follows: d. Requirements 1. What are the advantages of breaking down the computation into two separate components? 2. Fill in the blanks for the following table: Revenues Income Investment Income as a percentage of revenues Investment turnover ROI Requirement 2. Fill in the blanks for the following table: (Enter investment turnover to the nearest tenth, X.X.) Companies in Same Industry B Income and investment alone shed investment or to its A 1,400,000 $ 210,000 $ 700,000 % Company B does % income. 1,100,000 165,000 % Income Income Revenues Investment Revenues Investment 3% C Now comment on the relative performance of these companies as thoroughly as the data permit. light on comparative performances. Thus, we Company B should emphasize increasing investment turnover by reducing percentage of revenues by increasing only its 5,500,000 1.5% 2.0 = % Company A in terms of income margin. Company B has a Company A's. Company C's income as a…