Test your basic knowledge |

Financial Modeling And Proforma Analysis

Instructions:

Answer 22 questions in 15 minutes.
If you are not ready to take this test, you can study here.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. What does it mean when assets are greater than liability and equity?
Sale Volume Variance
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
Financial Modeling

2. Net new financing
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
Pro Forma that includes The Plug
When it is a good time to expand or delay expansion

3. SPABA
Retention rate - net income retained after tax
Useful in alerting you to need to plan for external financing - but - It cannot tell you your planned growth increases of decreased the firm's value
Maximize the value of stockholders' stake
Sales Price Variance

4. Plow back ratio
Retention rate - net income retained after tax
1. Financial statements 2. Cash flows
1. Reduce payout 2. Issue new debt 3. Raise new equity
Reduced

5. In financial Planning - what do we forecast?
Pro Forma that includes The Plug
When it is a good time to expand or delay expansion
Variable Cost Variance
1. Financial statements 2. Cash flows

6. Internal growth rate

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

7. Internal Growth Rate - what must a firm do to grow faster?
Financial Modeling
Useful in alerting you to need to plan for external financing - but - It cannot tell you your planned growth increases of decreased the firm's value
1. Reduce payout ratio 2. External financing
Variable Cost Variance

8. What are is the tool used for Financial Planning?
Usage Variance
1. Reduce payout 2. Issue new debt 3. Raise new equity
Reduced
Financial Modeling

9. What does the internal and sustainable rate tell us?

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

10. What is optimal Timing and Delay Option?
When it is a good time to expand or delay expansion
It means that the firm has generated more cash than what they planned to consume
Sale Volume Variance
1. Financial statements 2. Cash flows

11. UBAB
Sales Price Variance
Usage Variance
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales

12. Percentage of sales method
Maximize the value of stockholders' stake
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
The amount of new new financing that needs to be added to the liabilities and equity side of the pro forma balance sheet to make it balance

13. What does it mean when liability and equity are greater than assets?
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
Sales Price Variance
It means that the firm has generated more cash than what they planned to consume
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales

14. If a firm pays dividends - what happens to its Internal Growth Rate?
Variable Cost Variance
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Reduced
1. Reduce payout ratio 2. External financing

15. Second Pass Pro Forma
Pro Forma that includes The Plug
1. The maximum growth the firm can sustain without external financing 2. it is the growth the firm can support by reinvesting it's earnings
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
1. Reduce payout 2. Issue new debt 3. Raise new equity

16. VCBAA
Usage Variance
When it is a good time to expand or delay expansion
Variable Cost Variance
Financial Modeling

17. SVABB
Variable Cost Variance
Sale Volume Variance
Useful in alerting you to need to plan for external financing - but - It cannot tell you your planned growth increases of decreased the firm's value
Financial Modeling

18. The plug
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
The amount of new new financing that needs to be added to the liabilities and equity side of the pro forma balance sheet to make it balance
Retention rate - net income retained after tax
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

19. Sustainable growth rate
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
1. Reduce payout ratio 2. External financing
Variable Cost Variance

20. Sustainable growth rate - what must a firm do to grow faster?
Pro Forma that includes The Plug
1. Reduce payout 2. Issue new debt 3. Raise new equity
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
1. Financial statements 2. Cash flows

21. What is the goal of financial managers?

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183

22. What is assumed in the sustainable growth rate?
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
Useful in alerting you to need to plan for external financing - but - It cannot tell you your planned growth increases of decreased the firm's value
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
1. Reduce payout ratio 2. External financing