The first step involved in predicting financing needsis: a. project the firm\'s

Question

The first step involved in predicting financing needsis:
a. project the firm's sales revenues and expenses over theplanning period b. estimating the levels of investment in current and fixedassets that are necessary to support the projected sales c. determining the firm's financing needs throughout theplanning period d. none of the above The first step involved in predicting financing needsis:
a. project the firm's sales revenues and expenses over theplanning period b. estimating the levels of investment in current and fixedassets that are necessary to support the projected sales c. determining the firm's financing needs throughout theplanning period d. none of the above

Explanation / Answer

            Aneed for forecasting in financial management arises whenever thefuture financing needs of the firm are being estimated. Thereare three basic steps involved in predicting financingrequirements.

      (1) Project the firm’sSales revenues and expenses over the planning period.

      (2) Estimating the levels ofinvestment in current and fixed assets that are necessary tosupport the projected sales level.

      (3) Determining thefirm’s financing needs throughout the planning period.

      (4) None of theAbove.

Thus, Answer is: The first step involved in predictingfinancing needs is: (a) Project the firm’s salesrevenues and expenses over the planning period.

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