Question #1 (1 point)
All of the following are major disadvantages of the percent-of-sales method of financial forecasting except
The computerized models needed for forecasting are not user-friendly
It assumes everything in the business varies as a constant percent of sales
It cannot account for business parameters that have a nonlinear relationship to sales
The model requires excessive modification to reflect the real-world business parameters
Question #2 (1 point)
George Inc. only sells one product and they project to sell 4500 units next year at $20 each. They currently have 230 units in stock which cost $11 per unit to manufacture last year. Next year, the cost per unit to manufacture is expected to rise to $12 per unit. They desire to have 15% of unit sales in stock at the end of the year. How many units will George Inc. need to produce next year?
5245
4720
4945
5170
Question #3 (1 point)
In 2012, Murray Corp. had sales of $700,000, a profit margin of 5%, common stock of $120,000 and retained earnings of $230,000. What was Murray’s return on equity?
5%
10%
15%
20%
Question #4 (1 point)
Due to inflation, profit may be a result of increasing prices instead of actual company performance.
True
False
Question #5 (1 point)
Chelsea Lighting Inc. has beginning inventory of 18,000 units, will sell 60,000 units for the month, and desires to reduce ending inventory to 50% of beginning inventory. How many units should Chelsea produce?
42,000
60,000
33,000
51,000
Question #6 (1 point)
The following data can be found on Pinkerton Inc.’s 2012 balance sheet: Cash $45,000, Marketable Securities $70,000, Accounts Receivable $500,000, Inventory $525,000, Net Plant and Equipment $400,000, Accounts Payable $75,000, and Notes Payable $350,000. Please calculate Pinkerton Inc.’s Current Ratio.
0.21
2.68
1.45
2.39
Question #7 (1 point)
When employing financial ratio analysis, it is important to remember that accounting data are historical and…