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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. Second Pass Pro Forma
Sales Price Variance
1. Reduce payout 2. Issue new debt 3. Raise new equity
Pro Forma that includes The Plug
Sale Volume Variance

2. What are is the tool used for Financial Planning?
Variable Cost Variance
Maximize the value of stockholders' stake
Financial Modeling
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

3. The plug
Sales Price Variance
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
Financial Modeling
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

4. Sustainable growth rate - what must a firm do to grow faster?
Usage 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
1. Reduce payout 2. Issue new debt 3. Raise new equity
1. Financial statements 2. Cash flows

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

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6. Percentage of sales method
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
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
When it is a good time to expand or delay expansion
New financing is needed - the firm must borrow or issue new equity to fund the shortfall

7. Internal Growth Rate - what must a firm do to grow faster?
1. Financial statements 2. Cash flows
1. Reduce payout 2. Issue new debt 3. Raise new equity
Variable Cost Variance
1. Reduce payout ratio 2. External financing

8. What is assumed in the sustainable growth rate?
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
Sale Volume Variance
Usage Variance
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

9. UBAB
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
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
Usage Variance
Financial Modeling

10. Sustainable growth rate
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
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
Sale Volume Variance

11. Internal growth rate

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12. VCBAA
Pro Forma that includes The Plug
When it is a good time to expand or delay expansion
Retention rate - net income retained after tax
Variable Cost Variance

13. What is optimal Timing and Delay Option?
1. Financial statements 2. Cash flows
Pro Forma that includes The Plug
When it is a good time to expand or delay expansion
1. Reduce payout ratio 2. External financing

14. Plow back ratio
Variable Cost Variance
Retention rate - net income retained after tax
Sales Price Variance
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

15. In financial Planning - what do we forecast?
Maximize the value of stockholders' stake
Pro Forma that includes The Plug
1. Financial statements 2. Cash flows
New financing is needed - the firm must borrow or issue new equity to fund the shortfall

16. Net new financing
Variable Cost Variance
Retention rate - net income retained after tax
1. Reduce payout ratio 2. External financing
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

17. SVABB
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Sale Volume Variance
1. Financial statements 2. Cash flows
Financial Modeling

18. What does it mean when assets are greater than liability and equity?
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. Financial statements 2. Cash flows
Pro Forma that includes The Plug
New financing is needed - the firm must borrow or issue new equity to fund the shortfall

19. If a firm pays dividends - what happens to its Internal Growth Rate?
Pro Forma that includes The Plug
1. Reduce payout 2. Issue new debt 3. Raise new equity
Reduced
When it is a good time to expand or delay expansion

20. What is the goal of financial managers?

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21. SPABA
Variable Cost Variance
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Usage Variance
Sales Price Variance

22. What does it mean when liability and equity are greater than assets?
Retention rate - net income retained after tax
It means that the firm has generated more cash than what they planned to consume
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
1. Financial statements 2. Cash flows