True/False Indicate whether the sentence or statement is true or false.

1. A forecast is an accurate estimate of future demand

2. Lenders require Pro Forma statements because they want to make sure that the business will generate enough profit for the owner to get a large salary.

3. The longer the time horizon, the more accurate the forecast will be.

4. Once we select a forecasting model, changing market conditions may require us to change the model if it no longer performs as desired.

5. Judgmental models are quantitative because they use expert opinion and previous experience to determine the forecast.

6. Time Series models use historical records that are readily available within the firm to predict future sales.

7. In exponential smoothing, the value of alpha can be any whole number.

8. The formula for a regression line is y = a + bx.

9. On a Pro Forma income statement, the value we enter for sales revenue is normally derived from our forecast.

10. On a Pro Forma income statement, all values will increase by the same percentage as sales increase.

11. Working capital consists of the total assets and total liabilities of a company.

12. Net working capital is the difference between total current assets and total current liabilities.

13. The current ratio is current assets divided by current liabilities.

14. The disbursement float is the amount of time that elapses between depositing the debtors check in an account and the check clearing the account.

15. Factoring is the process of putting up accounts receivable as collateral to obtain cash.

16. The three Cs of credit are character, capacity, and comedy.

17. If credit sales remain the same and accounts receivable decrease, accounts receivable turnover will increase.

18. The economic order quantity formula balances the cost of ordering an item against the cost of storing an item.

19. Short-term debt management consists of obligations that will be paid within the current accounting period.

20. A revolving line of credit is guaranteed; a regular commercial line of credit is not guaranteed (i.e., by the bank to the borrower).