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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. What is optimal Timing and Delay Option?
Variable Cost Variance
Sales Price 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
When it is a good time to expand or delay expansion

2. What is assumed in the sustainable growth rate?
When it is a good time to expand or delay expansion
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
Sales Price Variance

3. SVABB
1. Reduce payout ratio 2. External financing
Pro Forma that includes The Plug
It means that the firm has generated more cash than what they planned to consume
Sale Volume Variance

4. Internal Growth Rate - what must a firm do to grow faster?
1. Reduce payout ratio 2. External financing
Pro Forma that includes The Plug
It means that the firm has generated more cash than what they planned to consume
Retention rate - net income retained after tax

5. Internal growth rate

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6. What are is the tool used for Financial Planning?
Variable Cost Variance
1. Financial statements 2. Cash flows
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
Financial Modeling

7. SPABA
Sales Price Variance
Retention rate - net income retained after tax
Reduced
Sale Volume Variance

8. What does it mean when assets are greater than liability and equity?
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
Sale Volume Variance
1. Reduce payout ratio 2. External financing

9. UBAB
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
Maximize the value of stockholders' stake
When it is a good time to expand or delay expansion
Usage Variance

10. Plow back ratio
Financial Modeling
Retention rate - net income retained after tax
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
New financing is needed - the firm must borrow or issue new equity to fund the shortfall

11. What is the goal of financial managers?

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12. Sustainable growth rate - what must a firm do to grow faster?
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
Reduced
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

13. VCBAA
Sale Volume Variance
Variable Cost Variance
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

14. If a firm pays dividends - what happens to its Internal Growth Rate?
Financial Modeling
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
Reduced

15. The plug
It means that the firm has generated more cash than what they planned to consume
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
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 new new financing that needs to be added to the liabilities and equity side of the pro forma balance sheet to make it balance

16. Percentage of sales method
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
Usage Variance
Retention rate - net income retained after tax
Maximize the value of stockholders' stake

17. Net new financing
When it is a good time to expand or delay expansion
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
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

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

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19. Sustainable growth rate
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
It means that the firm has generated more cash than what they planned to consume
Usage Variance

20. What does it mean when liability and equity are greater than assets?
Usage Variance
It means that the firm has generated more cash than what they planned to consume
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
Reduced

21. In financial Planning - what do we forecast?
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
1. Financial statements 2. Cash flows
Usage Variance

22. 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. Financial statements 2. Cash flows
Reduced