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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. Net new financing
Financial Modeling
Variable Cost Variance
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

2. Sustainable growth rate
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
Variable Cost Variance
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.

3. What is optimal Timing and Delay Option?
When it is a good time to expand or delay expansion
1. Reduce payout 2. Issue new debt 3. Raise new equity
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

4. What are is the tool used for Financial Planning?
Financial Modeling
When it is a good time to expand or delay expansion
Reduced
Usage Variance

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

6. What does it mean when liability and equity are greater than assets?
Retention rate - net income retained after tax
Sale Volume Variance
Sales Price Variance
It means that the firm has generated more cash than what they planned to consume

7. Second Pass Pro Forma
1. Reduce payout 2. Issue new debt 3. Raise new equity
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
1. Reduce payout ratio 2. External financing

8. Internal Growth Rate - what must a firm do to grow faster?
1. Reduce payout ratio 2. External financing
Maximize the value of stockholders' stake
Usage Variance
It means that the firm has generated more cash than what they planned to consume

9. VCBAA
1. Financial statements 2. Cash flows
It means that the firm has generated more cash than what they planned to consume
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
Variable Cost Variance

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

11. What is the goal of financial managers?

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

13. 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
Pro Forma that includes The Plug
Reduced
Sales Price Variance

14. What is assumed in the sustainable growth rate?
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
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
Pro Forma that includes The Plug

15. The plug
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
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

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

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17. UBAB
Usage Variance
Retention rate - net income retained after tax
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

18. Sustainable growth rate - what must a firm do to grow faster?
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
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. Reduce payout 2. Issue new debt 3. Raise new equity

19. Internal growth rate

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

21. Plow back ratio
Retention rate - net income retained after tax
Maximize the value of stockholders' stake
1. Reduce payout 2. Issue new debt 3. Raise new equity
When it is a good time to expand or delay expansion

22. SPABA
Sales Price Variance
Sale Volume Variance
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