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Financial Modeling And Proforma Analysis

Instructions:

Answer 22 questions in 15 minutes.
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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. Sustainable growth rate - what must a firm do to grow faster?
Retention rate - net income retained after tax
Sales Price Variance
Reduced
1. Reduce payout 2. Issue new debt 3. Raise new equity

2. SPABA
1. Financial statements 2. Cash flows
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
1. Reduce payout ratio 2. External financing

3. VCBAA
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

4. In financial Planning - what do we forecast?
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. 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

5. SVABB
Variable Cost Variance
Sale Volume Variance
Retention rate - net income retained after tax
Maximize the value of stockholders' stake

6. Internal Growth Rate - what must a firm do to grow faster?
1. Reduce payout ratio 2. External financing
Sale Volume Variance
Variable Cost Variance
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales

7. UBAB
Usage Variance
A forecasting method that assumes that as sales grow - many income statement and balance sheet items will grow - remaining the same percentage of sales
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

8. What is optimal Timing and Delay Option?
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
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
Variable Cost Variance

9. What is the goal of financial managers?

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

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11. Sustainable growth rate
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. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
The amount of additional external financing a firm needs to secure to pay for the planned increase of assets

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

13. If a firm pays dividends - what happens to its Internal Growth Rate?
Reduced
New financing is needed - the firm must borrow or issue new equity to fund the shortfall
Financial Modeling
When it is a good time to expand or delay expansion

14. What is assumed in the 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
1. Reduce payout ratio 2. External financing
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
Pro Forma that includes The Plug

15. What are is the tool used for Financial Planning?
1. Reduce payout 2. Issue new debt 3. Raise new equity
1. Financial statements 2. Cash flows
Financial Modeling
Variable Cost Variance

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

17. Second Pass Pro Forma
Sale Volume Variance
Pro Forma that includes The Plug
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

18. 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
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

19. Internal growth rate

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20. Net new financing
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
Sale Volume Variance
It means that the firm has generated more cash than what they planned to consume

21. The plug
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
1. Reduce payout 2. Issue new debt 3. Raise new equity
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.

22. What does it mean when assets are greater than liability and equity?
Usage Variance
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
Reduced