Podcast
Questions and Answers
What is the primary focus of the sensitivity analysis discussed in the text?
What is the primary focus of the sensitivity analysis discussed in the text?
- Determining the appropriate levels of debt and equity financing
- Preparing several projections to examine best and worst case scenarios
- Analyzing the impact of changes in assumptions on financing requirements, return on assets and equity (correct)
- Identifying the areas requiring greater scrutiny based on the assumptions with the greatest impact
If capital expenditures increase to 7.5% of sales, what would happen to the cash balance according to the text?
If capital expenditures increase to 7.5% of sales, what would happen to the cash balance according to the text?
- The cash balance will remain unchanged
- The cash balance will be below the level of prior years
- The cash balance will decline to $845 million, 2.4% of total assets (correct)
- The cash balance will increase to $3.9 billion
What does the text state is central to security analysis?
What does the text state is central to security analysis?
- Projecting financial statements
- Prospective analysis (correct)
- Sensitivity analysis
- Residual income valuation model
What would also result in similar increases in financing requirements?
What would also result in similar increases in financing requirements?
What is the purpose of the residual income valuation model mentioned in the text?
What is the purpose of the residual income valuation model mentioned in the text?
What is the primary purpose of the projected financial statements discussed in the text?
What is the primary purpose of the projected financial statements discussed in the text?
What percentage of sales is used in the projection for SG&A expense?
What percentage of sales is used in the projection for SG&A expense?
How is the gross profit calculated in the income statement projection?
How is the gross profit calculated in the income statement projection?
What ratio was used to calculate the historical interest expense relative to beginning-of-year interest-bearing debt?
What ratio was used to calculate the historical interest expense relative to beginning-of-year interest-bearing debt?
What amount is projected for tax expense based on the given information?
What amount is projected for tax expense based on the given information?
Which item is NOT included in the calculation of income before tax in the income statement projection?
Which item is NOT included in the calculation of income before tax in the income statement projection?
Which balance sheet item is used to calculate depreciation and amortization in the income statement projection?
Which balance sheet item is used to calculate depreciation and amortization in the income statement projection?
Which financial statement is typically projected first when conducting prospective analysis?
Which financial statement is typically projected first when conducting prospective analysis?
What is the first step in projecting the income statement?
What is the first step in projecting the income statement?
Which of the following is NOT typically used to project the expected growth in sales?
Which of the following is NOT typically used to project the expected growth in sales?
Based on the information provided, what was Target's projected gross profit margin for 2006?
Based on the information provided, what was Target's projected gross profit margin for 2006?
What is the purpose of conducting sensitivity analysis after completing the initial financial statement projections?
What is the purpose of conducting sensitivity analysis after completing the initial financial statement projections?
Which of the following financial statements is NOT explicitly mentioned as part of the projection process in the given text?
Which of the following financial statements is NOT explicitly mentioned as part of the projection process in the given text?
