Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Chapter 14, Problem 2RQ
Discuss the shortcomings of the percent of sales method of financial
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Why is an accurate sales forecast critical for financial planning?
1. Discuss the other types of forecasting methods that financial analysts use to predict future revenues.
2. Are there any several other factors that may need to be considered that affects the sales forecast?
Explain the difference between the financial statement approach and the valuation approach. Which approach is superior for making short-term financial decisions? and why?
Chapter 14 Solutions
Foundations Of Finance
Ch. 14 - Prob. 1RQCh. 14 - Discuss the shortcomings of the percent of sales...Ch. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 1SPCh. 14 - Prob. 2SPCh. 14 - (Financial forecastingdiscretionary financing...Ch. 14 - (Financial forecastingpercent of sales) Next years...Ch. 14 - Prob. 5SPCh. 14 - (Percent of sales forecasting) Which of the...
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- What happens with situations like Covid where we cannot predict future financials based on past performance metrics?arrow_forwardWhat advantages does the forecasted financial statement method have over theAFN equation for forecasting financial requirements?arrow_forwardWhat is a question that should be asked about accounts payable when forecasting?arrow_forward
- In isolation, which of the following is TRUE about a financial ratio? Select one: a. Useful only for past performance b. Useful piece of information c. Useful only for future predictions d. Useless piece of informationarrow_forward1.-The sales forecast is used as key information in the short-term financial planning process. True or False?arrow_forwardHow do you turn an income statement int a forecasted return? And how is it helpful?arrow_forward
- Why does financial planning usually equated with projections?arrow_forwardAnalyze the disadvantages of financial performance measures and the advantages of non-financial performance measures.arrow_forwardExplain the difference between deterministic and probabilistic financial planning models.arrow_forward
- When preparing a projected income statement, which of the following additional information, other than the financial statements would probably not be relevant? a) Expected capital expenditure b) The competitive environment c) New versus old store mix d) Expected level of macroeconomic activityarrow_forwardBy use of practical examples, discuss the following types of information processing errors in behavioural finance: i) Forecasting errors ii) Overconfidence iii) Conservatismarrow_forwardConsider the advantages and disadvantages of using the accounting rate of return as an investing criteria.arrow_forward
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