1. The starting point for forecasts should be

a. the time behavior of key measures such as sales growth, profit margin, and operating asset turnover

b.earnings growth which can then be multiplied by the components of the income statement and balance sheet

c. the time behavior of key measures of a comparable firm

d. estimates of growth in dividends

2. When forecasting, suspect accounting can cause forecast errors. Which is not suspect accounting?

a. Accounting method choice (such as straight-line vs accelerated depreciation)

b. Adjusting GAAP numbers

c. Hidden reserves

d. Efforts to smooth income (earnings management)

3. When forecasting sales growth as an external user

a. you can ignore information from Porter's 5 Forces

b. you should forecast the quantity and price for each individual item

c. you should consider the best information you can get from the company

d. you can ignore information from financial statement analysis

4. The present value of future free cash flows to shareholders is the basis for which valuation method:

a. the free cash flow model

b. the discounted residual operating income model

c. the price to book multiplier

d. the price to earnings multiplier