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 is optimal Timing and Delay Option?
Financial Modeling
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
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

2. 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

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

4. SVABB
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
1. Financial statements 2. Cash flows
Usage Variance

5. VCBAA
Variable Cost Variance
1. Financial statements 2. Cash flows
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
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

6. Net new financing
Financial Modeling
Reduced
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

7. If a firm pays dividends - what happens to its Internal Growth Rate?
Reduced
1. Reduce payout ratio 2. External financing
Variable Cost Variance
Sale Volume Variance

8. Internal Growth Rate - what must a firm do to grow faster?
1. Financial statements 2. Cash flows
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

9. Internal growth rate

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

10. Plow back ratio
Pro Forma that includes The Plug
1. Financial statements 2. Cash flows
Retention rate - net income retained after tax
Sale Volume Variance

11. UBAB
Usage Variance
Variable Cost Variance
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

12. 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

13. What are is the tool used for Financial Planning?
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
Financial Modeling
Variable Cost Variance

14. Second Pass Pro Forma
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
1. Reduce payout ratio 2. External financing
Retention rate - net income retained after tax

15. SPABA
Sales Price Variance
Usage Variance
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

16. The plug
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
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
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Reduced

17. Percentage of sales method
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
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

18. 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
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
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.

19. Sustainable growth rate - what must a firm do to grow faster?
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
It means that the firm has generated more cash than what they planned to consume
1. Reduce payout 2. Issue new debt 3. Raise new equity

20. 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
Reduced
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 maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.

21. What is assumed in the sustainable growth rate?
Maximize the value of stockholders' stake
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
Sales Price Variance

22. In financial Planning - what do we forecast?
1. Financial statements 2. Cash flows
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
Maximize the value of stockholders' stake
When it is a good time to expand or delay expansion