Question

Which of the following is not typically included among the three major components of a financial planning model? A. Inputs: current financial statements, forecasts of key variables B. Planning model: equations specifying key relationships C. Outputs: pro formas, financial ratios, sources and uses of cash D. Intuitions: common sense, guesses

Answer 1

The correct option is d. Intuitions: common sense, guesses

Step-by-step explanation:

Basically, there are three major components of a financial planning model which are as follows:

A. Inputs: Here, inputs means current financial statements, future forecasting. Forecasting can be in terms of sales, production, expansion of business, etc.

B: Planning Model: In this model, the role of planning is needed which can be done to plan for diversification of business, sales, new investment, financing, etc.

C: Outputs: After making the financial statements, the firm have to check the profitability and financial position by applying the financing ratios like - debt equity ratio, current ratio, net profit ratio. etc.

So, the option d is not included in the financial planning model.

Therefore, the correct option is d. Intuitions: common sense, guesses