CHAPTER 9

TRUE/FALSE Question

1. Accounts payable estimates are based on historical payable turns and cost of goods
sold.
ANS : TRUE REF: Subramanyam Edisi 11 halaman 512

2. The projected financial statements are primarily based on expected relations between
financial statement and balance sheet accounts..
ANS : FALSE REF : Subramanyam Edisi 11 halaman 514

3. Prospective analysis can be undertaken only after the historical financial statements
have been properly adjusted to accurately reflect the economic performance of the
company.
ANS : TRUE REF : Subramanyam Edisi 11 halaman 507

4. Depreciation expense is a significant line item and should be projected separately. It is

a fixed expense and is a function of the amount of depreciable assets.
ANS : TRUE REF : Subramanyam Edisi 11 halaman 509

5. If the level of cash is too low, additional long-term debt and/or common stock can be
decreased as required, keeping the level of financial leverage constant..
ANS : FALSE REF : Subramanyam Edisi 11 halaman 514

Multiple Choice Question

1. The valuation process requires estimates of future net income and the book value of
stockholder’s equity. The valuation model requires estimates of parameters:
a. Sales growth
b. Net profit margin (Net income/Sales)
c. Net working capital turnover (Sales/Net working capital)
d. All of bove
ANS : D REF : Subramanyam Edisi 11 halaman 516

2. Prospective analysis is a central component of value investing. It relies on…

a. A sound understanding of the company’s fundamentals.
b. Its economic environment.
c. All of above
d. None of above
ANS : C REF : Subramanyam Edisi 11 halaman 507

3. More detailed analysis in projected income statement would incorporate outside

information such as the following, except…
a. Expected level of macroeconomic activity
b. The competitive landscape
c. Financing activities
d. New versus old store mix
ANS : C REF : Subramanyam Edisi 11 halaman 508
 4. If the estimated cash balance is much higher or lower, further adjustments can be
made to …
a. Invest excess cash in marketable securities (projected income will need to be
adjusted for the additional nonoperating investment income)
b. Reduce long-term debt and/or equity proportionately so as to keep the degree of
financial leverage consistent with prior years
c. All of above
d. None of above
ANS : C REF : Subramanyam Edisi 11 halaman 514

5. Our forecasting of sales includes an analysis of…

a. Directions and trends in sales
b. Market share
c. Productive and financial capacity
d. All of above
ANS : D REF : Subramanyam Edisi 11 halaman 521

Matching Question
6. …is the final step in the financial statement analysis process.

7. If the level of cash is too low, additional long-term debt and/or common stock can be
increased as required, keeping the...

8. Valuation of equity shares is critically dependent on the projection process. The

valuation should closely examine the sensitivity of … estimates to underlying
assumptions in the projections.

9. The reliability of our cash forecast depends on the...

10. Our prospective analysis should critically examine the pro forma statements and
submit them to … on both their forecasts and their assumptions.

Jawaban:
A. Share price
B. Quality of the sales forecast
C. Feasibility tests
D. Level of financial leverage constant
E. Prospective analysis

1. E. REF : Subramanyam Edisi 11 halaman 507

2. D. REF : Subramanyam Edisi 11 halaman 514
3. A. REF : Subramanyam Edisi 11 halaman 517
4. B. REF : Subramanyam Edisi 11 halaman 521
5. C. REF : Subramanyam Edisi 11 halaman 524