FIN 571 WEEK 6 PRACTICE QUIZ

FIN 571 WEEK 6 PRACTICE QUIZ

Question 1 Planning models that are more sophisticated than the percent of sales method have

working capital accounts like inventory, accounts receivables,and accounts payables vary directly with sales.

all variable costs change directly with sales.

fixed assets that do not always vary directly with sales. all of these are true.

Question 2 Firms that achieve higher growth rates without seeking external financing

are not highly leveraged.

have less equity and/or are able to generate high net income leading to a high ROE. a

ll of these are true.

have a high plowback ratio.

Question 3 External financing needed: Triumph Company has total assets worth $6,413,228. Next year it expects a net income of $3,145,778 and will pay out 70 percent as dividends. If the firm wants to limit its external financing to $1 million, what is the growth rate it can support?

30.3%

26.5%

32.9%

6.4%