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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. Percentage of sales method
1. Reduce payout 2. Issue new debt 3. Raise new equity
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
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

2. What is the goal of financial managers?

3. Internal Growth Rate - what must a firm do to grow faster?
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
Maximize the value of stockholders' stake
1. Reduce payout ratio 2. External financing
Usage Variance

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

5. Internal growth rate

6. What are is the tool used for Financial Planning?
It means that the firm has generated more cash than what they planned to consume
Financial Modeling
Usage Variance
Sale Volume Variance

7. VCBAA
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 maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Maximize the value of stockholders' stake
Variable Cost Variance

8. What does it mean when liability and equity are greater than assets?
1. Financial statements 2. Cash flows
It means that the firm has generated more cash than what they planned to consume
Maximize the value of stockholders' stake
New financing is needed - the firm must borrow or issue new equity to fund the shortfall

9. Net new financing
When it is a good time to expand or delay expansion
Usage Variance
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
It means that the firm has generated more cash than what they planned to consume

10. What is optimal Timing and Delay Option?
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
When it is a good time to expand or delay expansion
Maximize the value of stockholders' stake
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

11. UBAB
Usage Variance
Variable Cost Variance
Sales Price Variance
1. Reduce payout 2. Issue new debt 3. Raise new equity

12. Sustainable growth rate - what must a firm do to grow faster?
Sale Volume Variance
1. Reduce payout ratio 2. External financing
1. Reduce payout 2. Issue new debt 3. Raise new 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

13. What is assumed in the sustainable growth rate?
Usage Variance
It means that the firm has generated more cash than what they planned to consume
Reduced
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

14. Sustainable growth rate
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Pro Forma that includes The Plug
Retention rate - net income retained after tax
Maximize the value of stockholders' stake

15. SVABB
Sale Volume Variance
Variable Cost Variance
Usage Variance
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

16. If a firm pays dividends - what happens to its Internal Growth Rate?
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
Reduced
Sale Volume Variance

17. Plow back ratio
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
Retention rate - net income retained after tax
1. Reduce payout ratio 2. External financing

18. In financial Planning - what do we forecast?
1. Financial statements 2. Cash flows
When it is a good time to expand or delay expansion
1. Reduce payout ratio 2. External financing
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

19. Second Pass Pro Forma
When it is a good time to expand or delay expansion
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

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

21. The plug
When it is a good time to expand or delay expansion
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
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
Retention rate - net income retained after tax

22. SPABA
Sales Price Variance
1. Reduce payout ratio 2. External financing
Reduced
1. Reduce payout 2. Issue new debt 3. Raise new equity