Which of the following statement regarding ratio analysis is incorrect? Select one: a. Ratios cannot tell whether assumptions about future cash flows are realistic. b. Ratios cannot confirm whether forecast assumptions will turn out to be correct. c. Ratios can tell whether future sales growth was accurately captured d. Ratios can tell whether growth rates for sales are consistent with past sales growth performance.

Which of the following statement regarding ratio analysis is incorrect? Select one: a. Ratios cannot tell whether assumptions about future cash flows are realistic. b. Ratios cannot confirm whether forecast assumptions will turn out to be correct. c. Ratios can tell whether future sales growth was accurately captured d. Ratios can tell whether growth rates for sales are consistent with past sales growth performance.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 3Q: Why is it true, in general, that a failure to adjust expected cash flows for expected inflation...

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Which of the following statements is correct? A. If assets and spontaneously generated liabilities are not projected to grow at the same rate as sales, then the AFN method will provide more accurate forecasts than the projected financial statement method. B. Dividends are paid with cash taken from the accumulated retained earnings account, hence dividend policy does not affect the AFN forecast. C. A negative AFN indicates that retained earnings and spontaneous capital are far more than sufficient to finance the additional assets needed. D. AFN is defined as the funds that a firm must raise internally. E. The AFN equation for forecasting funds requirements requires only a forecast of the firm’s balance sheet. Although a forecasted income statement may help clarify the results, income statement data are not essential because funds needed relate only to the balance sheet.
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