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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. The plug
Sale Volume 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
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
Retention rate - net income retained after tax

2. 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
When it is a good time to expand or delay expansion

3. If a firm pays dividends - what happens to its Internal Growth Rate?
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
Reduced
Variable Cost Variance

4. Sustainable growth rate
It means that the firm has generated more cash than what they planned to consume
Reduced
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.

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

6. Internal growth rate

7. What is the goal of financial managers?

8. Plow back ratio
When it is a good time to expand or delay expansion
Sales Price Variance
Financial Modeling
Retention rate - net income retained after tax

9. UBAB
1. Financial statements 2. Cash flows
Usage Variance
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining

10. What does it mean when liability and equity are greater than assets?
1. Reduce payout 2. Issue new debt 3. Raise new equity
It means that the firm has generated more cash than what they planned to consume
Sale Volume Variance
1. Financial statements 2. Cash flows

11. In financial Planning - what do we forecast?
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
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. Financial statements 2. Cash flows
1. Reduce payout 2. Issue new debt 3. Raise new equity

12. What does it mean when assets are greater than liability and equity?
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
Reduced
Maximize the value of stockholders' stake

13. SVABB
Sale Volume Variance
Financial Modeling
It means that the firm has generated more cash than what they planned to consume
1. Financial statements 2. Cash flows

14. What is optimal Timing and Delay Option?
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
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

15. What is assumed in the sustainable growth rate?
Financial Modeling
Variable Cost Variance
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales

16. Net new financing
1. Financial statements 2. Cash flows
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
Reduced
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

17. Internal Growth Rate - what must a firm do to grow faster?
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.
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

18. What are is the tool used for Financial Planning?
Financial Modeling
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

19. 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
Financial Modeling
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets
Variable Cost Variance

20. Sustainable growth rate - what must a firm do to grow faster?
1. Reduce payout 2. Issue new debt 3. Raise new equity
1. Financial statements 2. Cash flows
Variable Cost Variance
Maximize the value of stockholders' stake

21. SPABA
1. Reduce payout 2. Issue new debt 3. Raise new equity
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
Sales Price Variance

22. VCBAA
Sales Price Variance
Variable Cost Variance
Usage Variance
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets