1. The term “spontaneously generated funds” generally refers to increases in the cash account that result from growth in sales, assuming the firm is operating with a positive profit margin.a. True2. The most critical step in constructing a set of pro forma financial statements is the sales forecast.a. True b. False3. If your sales this year were $37,250,000 and you were forecasting 17 percent growth for next year, then your next year’s sales would be $54,250,000.a. Trueb. False 4. If ratios computed on forecasted “pro forma” financial statements are out of acceptable tolerances, it is an indication that the forecast is faulty and must be redone.a. Trueb. False 5. Consider the following financial data:Sales$3,8923,9046,0946,3375,075The company’s average annual sales growth rate from 2005 through 2009 was:a. 10.1%b. 30.4%6.9% 5.5%6. Assume that your firm wants its Inventory Turnover ratio next year to be 7x. Cost of goods Sold is forecasted to be $6,992. What will the forecasted inventory balance have to be to achieve a Turnover ratio of 7x?a. $999 b. $6,985c. $48,944d. Can’t tell without further information7. Kenney Corporation recently reported the following income statement for 2009 (numbers are in millions of dollars):
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