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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 does the internal and sustainable rate tell us?

2. VCBAA
Sale Volume Variance
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.

3. Internal growth rate

4. Sustainable growth rate
Sales Price Variance
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.
Sale Volume Variance

5. UBAB
It means that the firm has generated more cash than what they planned to consume
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
Usage Variance

6. Internal Growth Rate - what must a firm do to grow faster?
1. Reduce payout ratio 2. External financing
It means that the firm has generated more cash than what they planned to consume
When it is a good time to expand or delay expansion
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

7. 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
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

8. What is the goal of financial managers?

9. SPABA
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
Retention rate - net income retained after tax
Pro Forma that includes The Plug

10. What does it mean when liability and equity are greater than assets?
Variable Cost Variance
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. Second Pass Pro Forma
Pro Forma that includes The Plug
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

12. What are is the tool used for Financial Planning?
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
Financial Modeling
Usage Variance
Retention rate - net income retained after tax

13. What does it mean when assets are greater than liability and equity?
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.
Retention rate - net income retained after tax
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

14. Net new financing
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
Usage 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

15. The plug
Maximize the value of stockholders' stake
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
Sales Price Variance

16. Sustainable growth rate - what must a firm do to grow faster?
1. Reduce payout 2. Issue new debt 3. Raise new equity
Variable Cost 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 additional external financing a firm needs to secure to pay for the planned increase of assets

17. What is assumed in the sustainable growth rate?
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. 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

18. What is optimal Timing and Delay Option?
Retention rate - net income retained after tax
When it is a good time to expand or delay expansion
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

19. SVABB
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
It means that the firm has generated more cash than what they planned to consume
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
Sale Volume Variance

20. Percentage of sales method
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 ratio 2. External financing
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

21. Plow back ratio
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
It means that the firm has generated more cash than what they planned to consume
The maximum growth rate the firm can sustain without issuing new equity or increasing or increasing its debt to equity ratio.

22. In financial Planning - what do we forecast?
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
1. Some external financing 2. No new equity is issued 3. Issuing as much new debt as can be supported by those retaining
1. Financial statements 2. Cash flows