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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. UBAB
1. Reduce payout ratio 2. External financing
Usage Variance
Variable Cost Variance
When it is a good time to expand or delay expansion

2. SVABB
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.
Retention rate - net income retained after tax
Sale Volume Variance

3. Second Pass Pro Forma
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
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
Pro Forma that includes The Plug

4. SPABA
Maximize the value of stockholders' stake
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
Sales Price Variance
1. Reduce payout ratio 2. External financing

5. Percentage of sales method
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
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
Reduced

6. Sustainable growth rate - what must a firm do to grow faster?
1. Reduce payout 2. Issue new debt 3. Raise new equity
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
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.

7. What are is the tool used for Financial Planning?
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
1. Reduce payout ratio 2. External financing
Maximize the value of stockholders' stake
Financial Modeling

8. What does it mean when liability and equity are greater than assets?
Reduced
Usage Variance
It means that the firm has generated more cash than what they planned to consume
Sale Volume Variance

9. What is assumed in the sustainable growth rate?
When it is a good time to expand or delay expansion
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
Pro Forma that includes The Plug

10. What is optimal Timing and Delay Option?
When it is a good time to expand or delay expansion
Usage Variance
1. Financial statements 2. Cash flows
Sale Volume Variance

11. VCBAA
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 2. Issue new debt 3. Raise new equity
Variable Cost Variance
Reduced

12. Sustainable growth rate
1. Reduce payout ratio 2. External financing
Financial Modeling
Maximize the value of stockholders' stake
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.

13. Internal Growth Rate - what must a firm do to grow faster?
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 ratio 2. External financing
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
1. Reduce payout 2. Issue new debt 3. Raise new equity

14. If a firm pays dividends - what happens to its Internal Growth Rate?
Reduced
1. Financial statements 2. Cash flows
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
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

15. The plug
Usage 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
Variable Cost Variance

16. What does it mean when assets are greater than liability and equity?
1. Reduce payout ratio 2. External financing
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
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

17. Net new financing
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
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. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

18. Plow back 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
Retention rate - net income retained after tax
Pro Forma that includes The Plug
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

19. Internal growth rate

20. In financial Planning - what do we forecast?
1. Financial statements 2. Cash flows
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. Reduce payout ratio 2. External financing
Maximize the value of stockholders' stake

21. What is the goal of financial managers?

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