QUESTION 1When a company reports a deferred tax asset it means that the company will receive a
tax benefit in the future.
o True
o False
QUESTION 2
To forecast future performance, we should first create a set of financial statements that
reflects items we expect to persist.
o True
o False
QUESTION 3
The parsimonious projection method relies on sales growth, net operating profit margin
(NOPM), and asset turnover (AT) to project net operating profit after tax and net
operating assets.
o True
o False
QUESTION 4
An unbiased approach to forecasting future revenues gives equal weight to historical
organic revenue growth and revenue growth from mergers and acquisitions.
o True
o False
QUESTION 5
The usual financial statement projection process is completed in the following order:
balance sheet, income statement, statement of cash flows.
o True
o False
QUESTION 6
When forecasting future events, it is better to take a more conservative view for items
such as revenue growth and profit margins.
o True
o False
QUESTION 8
Best Tacos Company reports 2011 and 2012 total revenues of $55 million and $66
million respectively. If we expect prior growth to persist, we would forecast a revenue
growth rate of:
o 15%
o 35%
o 20%
o 25%
o None of the above
QUESTION 9
Following are financial statement numbers and ratios for Lockheed Martin Corp. for the
year ended December 31, 2011. If we expected revenue growth of 2.67% in the next
year, what would projected revenue be for 2012?
Total revenue (in millions) $46,499
Net operating profit margin (NOPM) 8.2%
Net operating asset turnover (NOAT) 6.4
o $47,740.5 million
o $50,311.9 million
o $45,289.8 million
o $49,474.9 million
o None of the above
QUESTION 10
RsQ_010Following are financial statement numbers and ratios for Snap-On Incorporated
for the year ended January 1, 2011 (in millions). If we expected revenue growth of 2% in
the next year, what would projected revenue be for the year ended December 30, 2011?
NOPAT 322.6
NOA 2,345.8
Net operating profit margin (NOPM) 11.3%
Net operating asset turnover (NOAT) 1.31
o $3,176.7 million
o $3,739.0 million
o $2,854.2 million
o $2,911.3 million
o None of the above
QUESTION 11
CVS Caremark reported sales of $107,100 million and property, plant and equipment
(PPE), net of $8,467 million in 2011. If sales are projected to increase 10% per year over
the next five years, what is the projected capital expenditures (purchases of new PPE)
for 2012?
o $ 8,467 million
o $ 9,314 million
o $10,710 million
o $ 9,000 million
o There is not enough information to determine the amount.
QUESTION 14
Using the information in the table calculate Michalko’s cost of debt capital,
11.5%
o 11.5%
o 10.0%
o 7.2%
o 4.3%
76.0%
