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CFI FMVA EXAM Questions AND Answers

CFI FMVA certification questions and answers (University of Nigeria, Nsukka)

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CFI FMVA EXAM QUESTIONS AND ANSWERS(ANSWERS IN RED)

You are considering an investment into Company XYZ and need to determine the company's value and the
appropriate investment amount. You have been provided with historical financial statements for the past
three years in order to build a forecast model. Key assumptions to use include:

1. Future sales revenue is assumed to increase at 2.5% annually.

2. Gross margin for 2021E is assumed to be equal to the average gross margin % for 2019 and 2020,
but will decrease by 2.5% (i.e. 250 bps) each year thereafter.
3. SG&A expense is assumed to be a percentage of revenue for the forecast period. That percentage is
equal to the 2018-2020 average. SG&A Ratio = SG&A / Total Revenue
4. Depreciation expense is assumed to be a percentage of revenue for the forecast period. That
percentage is equal to the 2018-2020 average
5. The tax rate for the forecast period is assumed to be equal to the effective tax rate for 2018
6. Capital expenditures for any given year in the forecast period is assumed to be 3x the prior year's
depreciation expense. For example, 2021 capital expenditures is equal to 3x 2020 depreciation
expense.
7. No new debt or equity is assumed to be issued
8. For an individual: ETR = Total Tax ÷ Taxable Income. For a corporation: ETR = Total Tax ÷ Earnings
Before Taxes.

1
1. What is Gross Profit in 2028E using the assumptions listed above and on the Control Panel?

Review Later
$17,545
$27,780

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$30,704
$40,938
2
2. What is EBITDA in 2022E using the assumptions listed above and on the Control Panel?
Review Later
$14,625

$20,172
$18,911

$17,404
3
3. What is Cash Generated From Operating Activities in 2025E using the assumptions listed above and
on the Control Panel?
Review Later
$12,074

$12,379
$12,640

$13,523
4
4. What is the PP&E balance in 2030E using the assumptions listed above and on the Control Panel?

Review Later
$122,220

$158,604
$136,122

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$148,922
5
5. What is the cash ratio in 2025E using the assumptions listed above and on the Control Panel?
Review Later
4.8x
4.9x

5.5x
5.4x

6
6. What is the margin impact ratio in 2026E using the assumptions listed above and on the Control
Panel?
Review Later
0.35x

0.28x
0.19x

0.14x
7
7.What is the cash turnover ratio in 2029E using the assumptions listed above and on the Control Panel? Is
it higher or lower than the same ratio in 2020?
Review Later
0.30x; lower

1.79x; lower
0.56x; lower

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1.68x; higher

8
8
8.What is the risk-free rate?
Review Later
3.0%

2.0%
3.5%

2.5%
9
9.Based on a discounted cash flow analysis and using the WACC as the discount rate, what is the implied
equity value of Company XYZ on January 1, 2021?
Review Later
$77,210

$79,292
$73,712

$79,946
Questions:

1. Based on a discounted cash flow analysis and using the WACC as the discount rate, what is the
implied equity value of Company XYZ on January 1, 2021? [the right answer is in green = $73,712; I got as
close to that number as possible]

Cash from which period would I have to use to calculate Implied Equity Value? Is it from the terminal year or
from 2021? Right now, it's using cash from 2021.

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I calculated PV of FCF and PV of TV by using NPV formula ---> =NPV(WACC!N25,G29:P29)*(1+WACC!

$N$25)^0.5 (for mid-year discounting); xNPV returns a similar result but it doesn't match the right answer.
10
10. What is the implied equity value at the transaction date (June 15, 2024) based on a discounted cash flow
analysis using the WACC as the discount rate, and assuming $50 million of cash and zero debt?
Review Later
$95,586

$98,016
$89,193

$95,102
11
11. Assuming an investment is made on June 15, 2024 in an amount equal to 1.5x the equity value at that
date, what is the investor IRR?

Review Later
-6.30%

-6.37%
-6.72%

-5.40%
12
12. Assuming an investment is made on June 15, 2024 in an amount equal to 1.5x the equity value at that
date, what is the equity IRR if the investment is funded with 70% debt?
Review Later

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11.9%
12.0%

13.1%
11.5%
13
13. If Gamma Limited has net income of 130, a depreciation expense of 60, an accounts receivable
decrease of 20 over last period, and an accounts payable increase of 10 over last period, what is the
company's net operating cash flows.
Review Later
220
180
200
160
13
Where would ‘accounts payable’ most likely appear in a set of financial statements?
Review Later
In the balance sheet under 'non-current liabilities'
In the income statement before operating profit
In both the income statement and the balance sheet
In the balance sheet under 'current liabilities'

14
Where would advertising costs normally be found?
Review Later

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On the income statement, within cost of sales

On the balance sheet, within contingent liabilities
On the balance sheet, within intangible assets
On the income statement, within selling, general and administration
14
What is an advantage to using a multi-step income statement?
Review Later
The fixed costs and variable costs are broken out separately
Net Income is shown before income taxes
All income items are grouped in one section, and all expenses in another
Direct expenses and indirect expenses are broken out separately

15
What combination of keys turns the value in a cell into a percentage?
Review Later
ALT + P (PC) / Ctrl + P (Mac)
ALT + M (PC) / Ctrl + M (Mac)
CTRL + H (PC) / Command + H (Mac)
ALT + H + P (PC) / Ctrl + Shift + % (Mac)
15

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Given the above screenshot, which of the following is the resulting value in cell G2?

Review Later
12/31/2021
9/30/2017
12/31/2020
12/31/2019

16
Which of the following is NOT a form of subordinated debt?
Review Later
High yield bonds
Vendor Notes
Revolver
Payment-In-Kind Notes
16
Cost of Equity 5%
Cost of debt 7%
% Debt 60%
% Equity 40%

Given the data in the above table, what is the weighted average cost of capital of this company?

Review Later
3.7%

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5.9%
6.2%
4.0%

17
Which of the following companies has the lowest degree of leverage?
Review Later
20% Debt, 80% Equity
90% Debt, 10% Equity
50% Debt, 50% Equity
30% Debt, 70% Equity
17
Which of the following is the correct ordering of the capital stack (from most secure to least secure)?
Review Later
Senior debt -> Subordinated debt-> Equity
Senior debt -> Equity -> Subordinated debt
Equity -> Subordinated debt -> Senior debt
Subordinated debt -> Senior debt -> Equity

18
The correlation coefficient for two sets of numbers that are perfectly negatively correlated is:
Review Later
0
-1

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-0.5
1
18
What is the weighted average cost of capital (WACC) for ABC Limited which has the following capital
structure? $5m of equity with a cost of equity of 15%; $2m of mezzanine finance with a cost of 9.5%; $1m of
senior debt with a cost of debt of 7%.
Review Later
8.63%
9.56%
13.73%
12.63%

19
For which organization would you expect to see the highest inventory turnover ratio?
Review Later
Luxury vehicle dealership
Electronics retailer
Grocery retailer
Department store
19
Which of the following is a tertiary ratio that drives profitability?
Review Later
EBIT / Sales

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EBIT / Net Profit

Net Profit / Sales
SG&A Expense / Sales

20
When calculating the quick ratio or "acid test" which current asset or liability is omitted?
Review Later
Accounts receivable
Inventory
Cash
Accounts payables

20
If the total assets to equity ratio of a company is increasing, it is possible that:
Review Later
The company is increasing the use of debt and getting higher financial leverage
The company is decreasing its efficiency in operations
The company is decreasing the use of debt and getting lower financial leverage
The company is increasing its efficiency in operations
When the total assets / equity ratio of a company are increasing, it is possible that the company is increasing
the use of debt and gets higher financial leverage. The asset to equity ratio shows the relationship of the
total assets in a firm to those owned by shareholders

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21
Which ratio is not one of the three ratios that multiply together to produce the return on equity ratio?
Review Later
Total asset turnover
Net profit margin
Operating profit margin
Financial leverage
2
What actions could a company take to reduce its working capital funding gap?
Review Later
Pay suppliers more quickly
Tighten customer credit terms
Allow customers to delay payments
Increase inventory levels
23
What’s the forecasted EBIT based on the information below?

 Revenues: 56,000
 Cost of goods sold: 32,000
 SG&A: 8,500
 Depreciation: 2,700
 Interest: 1,200
 Taxes: 3,800

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Review Later
11,600
12,800
7,800
15,500
24
Forecast the 2019 Cost of goods sold on the previous year’s number and the assumptions

2018 Actual 2019 Estimate

Sales Growth 6% 8%
Gross Margin 40% 40%
Revenues 50,000
Cost of Goods Sold 30,000

Review Later
29,160
32,400
26,630
35,200

25
What’s the retained earnings end of period based on the information below?

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 Retained earnings beginning of period: 7,500

 Net income: 2,300
 Dividends paid: 1,700

Review Later
7,400
6,900
8,100
11,500
26
Assuming a company has no other funding sources other than debt and common equity, what is the
difference between enterprise value and equity value?
Review Later
Cash
All interest bearing debt less cash and equivalents
All interest bearing debt
Long term deb

26
What is the weighted average cost of capital if a business has a cost of equity of 12%, a cost of debt of 10%,
tax rate of 25%, 20 million market value of debt, and 60 million market value of equity?
Review Later
9.8%
10.9%
10.4%

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11.5%
27
Based on the course, which of the following ratios commonly estimates the terminal value in a discounted
cash flow (DCF) analysis?
Review Later
P/E
EV/Sales
EV/EBITDA
EV/EBIT
28
Please sort the following into pros for comparable company analysis and pros for precedent transaction
analysis.
Review Later

Observable current value for a company (what investors are actually paying for business right now)

Large number of potential companies to compare to

Readily available

Includes takeover premium / control premium

Includes synergy value

Shows the value investors paid for the entire company (not just 1 share)

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A. Comparable company analysis

B. Precedent transaction analysis

29
Which of the following is NOT an advantage to link workbooks?
Review Later
Different spreadsheets can be worked on simultaneously by different people
Provides flexible reporting system
Small management budget templates can be sent to budget holders
The links will update themselves when the file name changes
30
Based on the information provided, calculate the revenue variance percentage and determine whether it is
favorable or unfavorable.

Review Later
-85.71% unfavorable

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16.67% favorable
-16.67% unfavorable
85.71% favorable
31
Budgets must link ________ to objectives, so budgeting is a tactical implementation of the ________.
Review Later
Strategies, operation plan
Business plan, operation plan
Operations, business plan
Strategies, business plan
32
Using the information given in the table below, identify whether the sales volume variance and price variance
are favorable or unfavorable.

Review Later
Favorable, unfavorable
Unfavorable, unfavorable

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Favorable, favorable
Unfavorable, favorable
33
Inputs should be blue colored font and should have ________ only. Process and outputs should be in black
colored font and have _______ only.
Review Later
hardcoded numbers only, formulas only
hardcoded numbers only, both numbers and formulas
formulas only, hardcoded numbers only
both numbers and formulas, formulas only
34

From the chart above, decision makers should pay most attention to the month:

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Review Later

35
The PP&E gross book value at the start of the month is 60,000, and the CAPEX of the month is 12,000. The accumulated depreciation
at the start of the month is 25,000; the depreciation expense of the month is 750.
The net book value of PP&E calculated from the data above is _____.
Review Later
23,750
48,000
46,250
22,250
36
You should perform sensitivity analysis when:
Review Later
You want to demonstrate several business cases
You need to change multiple inputs at once
You need to determine which assumptions matter the most
You want to reach more accurate forecast results
If you want to test how an increase in percentage of cost of good sold affects the contribution margin, you
would use ________.
Review Later
Scenario analysis
Sensitivity analysis

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A combination of sensitivity and scenario analysis

Either sensitivity or scenario analysis
38
As an alternative to CTRL + C and then CTRL + V to perform copy and paste, what combination of keys (as
outlined in the videos) will perform the same action?
Review Later
ALT + D
CTRL + Q
CTRL + D
ALT + P

39
When creating a waterfall chart for ABC Inc.’s 2018 net earnings, which of the data points do you need to set
as totals? Select ALL correct answers.

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Review Later
Net earnings
Revenue
Gross profit
Salaries & benefits
Cost of goods sold
Interest
Depreciation & amortization
Taxes
40
What’s the best way to center the heading text “Business Unit Revenue ($000)” across the cells in dark blue
(B2-F2) for easier editing?

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Review Later
Select all cells in dark blue – Alignment – Merge & Center
Move the text from cell B2 to D2 and adjust the length of the columns
Select all cells in dark blue – Format Cells – Alignment – Horizontal: Center Across Selection
Select all cells in dark blue – Format – Alignment – Align Center
41
The highlighted pane in orange in the screenshot below is known as the

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Review Later
Navigation pane
Slide pane
Placeholder
Notes section
42
Suppose you have selected to Format Shape of a chosen textbox. Resize shape to fit text is under which
tab?
Review Later
Alt Text
Position
Size

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Text Box
43
Please sort the following into PEST Analysis, Porter's 5 Forces, Competitive Advantage
Analysis and SWOT Analysis
Review Later

Weaknesses

Economic Forecasting

Cost Leadership

Differentiation

Social Forecasting

Opportunities

Potential new entrants and barriers to entry

Technological Forecasting

Suppliers and their bargaining power

44
Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The
exercise price of these options is $3.75. The company also has $200,000 of convertible bonds with an

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effective conversion price of $4.00. The average market share price for the reporting period is $7.50. What is
the diluted shares outstanding using the treasury stock method & if-converted methods?
Review Later
342,000
305,000
292,000
345,333
45
Total expected equity financing for Amazon’s purchase of Walmart, at the assumed 50-50% equity and debt
financing deal mix provided, is as follows:

Review Later
$201,130
$241,356
$268,024
$443,485
46
Total transaction costs, based on the assumptions provided, are expected to be:
Review Later
$18,382
$22,002
$19,895
$19,002
47

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The incremental annual depreciation expense as a result of Amazon’s acquisition of Facebook, is expected to be:
Review Later
$51,533
Nil - Amazon will obtain Facebook’s PP&E, Goodwill, and Other Intangibles at Book Value
$49,383
$36,847

Scores By Category
Accounting
50%
Budgeting & Forecasting
82%
Excel
100%
Finance
71%
Financial Modeling
44%
Presentation
65%
Strategy
100%
Valuation
55%

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What is Gross Profit in 2028E using the assumptions listed above and on the Control Panel?

Your Answer
$17,545
Correct Answer
$17,545
Explanation
None.

2
What is EBITDA in 2022E using the assumptions listed above and on the Control Panel?
Your Answer
$18,911
Correct Answer
$18,911
Explanation
None.

3
What is Cash Generated From Operating Activities in 2025E using the assumptions listed above and on the
Control Panel?
Your Answer
$13,523
Correct Answer
$13,523
Explanation

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None.

4
What is the PP&E balance in 2030E using the assumptions listed above and on the Control Panel?

Your Answer
$136,122
Correct Answer
$136,122
Explanation
None.

5
What is the cash ratio in 2025E using the assumptions listed above and on the Control Panel?
Your Answer
4.9x
Correct Answer
4.9x
Explanation
None.

6
What is the margin impact ratio in 2026E using the assumptions listed above and on the Control Panel?
Your Answer
0.19x
Correct Answer
0.19x

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Explanation
None.

7
What is the cash turnover ratio in 2029E using the assumptions listed above and on the Control Panel? Is it
higher or lower than the same ratio in 2020?
Your Answer
1.68x; higher
Correct Answer
1.68x; higher
Explanation
None.

8
What is the risk-free rate?
Your Answer
2.5%
Correct Answer
2.5%
Explanation
None.

9
Based on a discounted cash flow analysis and using the WACC as the discount rate, what is the implied
equity value of Company XYZ on January 1, 2021?
Your Answer

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$73,712
Correct Answer
$73,712
Explanation
None.

10
What is the implied equity value at the transaction date (June 15, 2024) based on a discounted cash flow
analysis using the WACC as the discount rate, and assuming $50 million of cash and zero debt?
Your Answer
$95,102
Correct Answer
$95,102
Explanation
None.

11
Assuming an investment is made on June 15, 2024 in an amount equal to 1.5x the equity value at that date,
what is the investor IRR?

Your Answer
-6.30%
Correct Answer
-6.30%
Explanation
None.

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12
Assuming an investment is made on June 15, 2024 in an amount equal to 1.5x the equity value at that date,
what is the equity IRR if the investment is funded with 70% debt?
Your Answer
12.0%
Correct Answer
12.0%
Explanation
None.

13
If Gamma Limited has net income of 130, a depreciation expense of 60, an accounts receivable decrease of
20 over last period, and an accounts payable increase of 10 over last period, what is the company's net
operating cash flows.
Your Answer
180
Correct Answer
220
Explanation
Net operating cash flow = 130 + 60 + 20 + 10 = 220

14
What is an advantage to using a multi-step income statement?
Your Answer
Direct expenses and indirect expenses are broken out separately
Correct Answer

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Direct expenses and indirect expenses are broken out separately

Explanation
None.

15

Given the above screenshot, suppose =SMALL(C2:C6,4) is entered into cell C9. What output will result from
this formula?
Your Answer
780
Correct Answer
780
Explanation
From ascending order – 10, 50, 460, 780,.... (780 is the fourth smallest number)

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16
Cash 100,000
Debt 60,000
Tax Rate 10%
Discount Rate 6%
Enterprise Value 500,000
Perpetual Growth Rate 4%
Given the data in the above table, calculate market capitalization of this hypothetical company.
Your Answer
$540,000
Correct Answer
$540,000
Explanation
Market capitalization = Enterprise value + Cash – Debt
Market capitalization = 500,000 + 100,000 - 60,000 = 540,000

17
Which of the following is not a function of public accounting firms?
Your Answer
Financial Planning & Analysis
Correct Answer
Financial Planning & Analysis
Explanation
FP&A is typically completed by corporate hires for established companies.

18

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What is the present value of a constant perpetuity of 25 per year where the required rate of return is 5%?
Your Answer
500.00
Correct Answer
500.00
Explanation
PV = C / r, so PV = 25 / 0.05 = 500

19
Which of the following items are not included when determining income from operations?
Your Answer
Taxes
Correct Answer
Taxes
Explanation
Tax expenses are not part of operating costs, and is not considered when determining the profits from
operations.

20
The debt to tangible net worth ratio is calculated as follows:
Your Answer
Interest Bearing Liabilities / (Equity - Intangible Assets)
Correct Answer
Interest Bearing Liabilities / (Equity - Intangible Assets)
Explanation
Debt to tangible net worth ratio = Interest bearing liabilities / (Equity - Intangible assets)

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21
When calculating the quick ratio or "acid test" which current asset or liability is omitted?
Your Answer
Inventory
Correct Answer
Inventory
Explanation
Inventory is removed from quick ratio because it assumes that inventories cannot be sold as fast as other
current assets.

22
The debt to equity ratio indicates:
Your Answer
The proportion of the company financed by lenders versus owners
Correct Answer
The proportion of the company financed by lenders versus owners
Explanation
Debt to equity ratio looks at the percentage of debt and the percentage of equity in a company.

23
Forecast the accounts receivable for Company XYZ using the following annual information.

 Receivable days assumption = 55 days

 Payable days assumption = 69 days
 Forecasted revenue = $263,500
 Forecasted cost of goods sold = $114,780

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Your Answer
39,705
Correct Answer
39,705
Explanation
Forecast accounts receivable = Receivable days / 365 x Sales = 55 / 365 x $263,500 = $39,705

24
Which of the following items can be found in a published cash flow statement under "operating activities"?
Select ALL correct answers.
Your Answer
Depreciation
Changes in operating assets and liabilities
Correct Answer
Depreciation
Changes in operating assets and liabilities
Explanation
None.

25
What is the total cash from operating activities based on the information below?

 Net income: 500

 Depreciation: 80
 Increase in receivables: 100
 Increase in inventory: 50
 Increase in payables: 60

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Your Answer
490
Correct Answer
490
Explanation
Cash from operating activities = 500 + 80 – 100 – 50 + 60 = 490

26
How do you find the terminal value using the EV/EBITDA exit multiple?
Your Answer
Terminal EV = EV/EBITDA x EBITDA value of final year of forecast
Correct Answer
Terminal EV = EV/EBITDA x EBITDA value of final year of forecast
Explanation
The EBITDA value used must be the EBITDA value of the final year of forecast.

27
The chart type we used to build the football field chart was?
Your Answer
Stock chart - Open-high-low-close
Correct Answer
Stock chart - Open-high-low-close
Explanation
Please review the Presentation of Results section.

28

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Which of the following is the correct definition for free cash flows to the firm?
Your Answer
EBITDA x (1 - Tax Rate) + Depreciation +/- Changes in Working Capital - Capex
Correct Answer
EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working Capital - Capex
Explanation
Free Cash Flow = EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working Capital - Capex

29
Identify which of the following is not a goal of the variance dashboard.
Your Answer
A detailed written report
Correct Answer
A detailed written report
Explanation
A dashboard should be a visual report. It should be light on words and use graphics to convey the
information.

30
To find out the value of the assumptions that are needed to hit a certain budget target, you would use
______; to optimize an output, you would use ______.
Your Answer
Goal seek, solver
Correct Answer
Goal seek, solver
Explanation

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You would use goal seek and solver, because pivot table is used to perform analysis on the data, while
consolidate is to summarize data from separate sheets onto one sheet.

31
Which of the following is the best key performance indicator (KPI) for measuring customer satisfaction?
Your Answer
Employee feedback of customer satisfaction
Correct Answer
Customer retention rate
Explanation
Revenue increase and increase in sales price without losing customers is not directly tied to customer
satisfaction, while employee feedback on customer satisfaction could be manipulated to benefit the
employee, therefore customer retention rate is the best measure of customer satisfaction.

32
Identify which trait below about incremental budgeting is FALSE.
Your Answer
Inputs or activities are determined by the budgeted outputs
Correct Answer
Inputs or activities are determined by the budgeted outputs
Explanation
"Inputs or activities are determined by the budgeted outputs" This describes activity-based budgeting, not
incremental budgeting.

33
Data validation works for setting a reasonable range for _______.
Your Answer

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Inputs
Correct Answer
Inputs
Explanation
None.

34
The opening balance of Company A is 25,000, and the repayment is scheduled for 1,000 per month at an
annual interest rate of 5%. Use the average debt balance to calculate the interest payment.

The closing balance of debt at the end of the month is _____ and the interest payment is _____.
Your Answer
24,000; 102
Correct Answer
24,000; 102
Explanation
Closing balance = 25,000 - 1,000 = 24,000
Interest payment = (25,000 + 24,000) /2 x 5% /12 = 102

35
The PP&E gross book value at the start of the month is 60,000, and the CAPEX of the month is 12,000. The
accumulated depreciation at the start of the month is 25,000; the depreciation expense of the month is 750.
The net book value of PP&E calculated from the data above is _____.
Your Answer
46,250
Correct Answer
46,250

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Explanation
Net book value of PP&E = (60,000 + 12,000) – (25,000 +750) = 46,250

36
When performing a scenario analysis, which of the following tools/functions in Excel is used to create a
dropdown list where we can select the live case?
Your Answer
Data Validation
Correct Answer
Data Validation
Explanation
Data Validation is used to create a switch for the live case which the user wants to test to see how changes
in multiple inputs impact the output.

Data Table, Tornado Chart and the INDEX MATCH MATCH function are used to perform a sensitivity
analysis.

37
If you want to test how an increase in percentage of cost of good sold affects the contribution margin, you
would use ________.
Your Answer
Sensitivity analysis
Correct Answer
Sensitivity analysis
Explanation

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Scenario analysis tests changes in multiple assumptions, like what will happen if another "story" happens,
while sensitivity analysis can only test one assumption at a time. Although scenario analysis can be used to
test one variable, sensitivity analysis is much easier and provides multiple ranges out output depending on
changes to the assumption.

38
When creating a waterfall chart for ABC Inc.’s 2018 net earnings, which of the data points do you need to set
as totals? Select ALL correct answers.

Your Answer
Depreciation & amortization
Net earnings
Correct Answer

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Revenue
Gross profit
Net earnings
Explanation
None.

39
Building a heat map would be an appropriate way to visualize data in which of the following?
Your Answer
Scatterplots
Correct Answer
Sensitivity Analysis
Explanation
A heat map is a great way to visualize sensitivity analysis. Emphasizing data on the high and low end can
really elevate presentation. A sample heat map is given below.

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40
As an alternative to CTRL + C and then CTRL + V to perform copy and paste, what combination of keys (as
outlined in the videos) will perform the same action?
Your Answer
CTRL + D
Correct Answer
CTRL + D
Explanation
A good way to remember the CTRL + D shortcut is that D stands for duplicate
41
Suppose you have selected to Format Shape of a chosen textbox. Resize shape to fit text is under which
tab?
Your Answer
Text Box
Correct Answer
Text Box
Explanation
Resize shape to fit text is found under the Text Box section

42
Suppose you have inserted a line on a PowerPoint slide. The line is selected, and you are currently editing
the line on the Format tab under Drawing Tools. Which of the following measurements for height and width
(respectively) would make the line completely horizontal?
Your Answer
0cm; 75cm
Correct Answer

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0cm; 75cm
Explanation
To align a line horizontally, the height dimension of a line must be set to 0cm. The width dimension only
determines the length of the line.

43
Please sort the following into PEST Analysis, Porter's 5 Forces, Competitive Advantage
Analysis and SWOT Analysis
Weaknesses

Your Answer
SWOT Analysis
Correct Answer
SWOT Analysis

Economic Forecasting

Your Answer
PEST
Correct Answer
PEST

Cost Leadership

Your Answer
Competitive Advantage Analysis
Correct Answer
Competitive Advantage Analysis

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Differentiation

Your Answer
Competitive Advantage Analysis
Correct Answer
Competitive Advantage Analysis

Social Forecasting

Your Answer
PEST
Correct Answer
PEST

Opportunities

Your Answer
SWOT Analysis
Correct Answer
SWOT Analysis

Potential new entrants and barriers to entry

Your Answer
Porter's 5 Forces
Correct Answer
Porter's 5 Forces

Technological Forecasting

Your Answer

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PEST
Correct Answer
PEST

Suppliers and their bargaining power

Your Answer
Porter's 5 Forces
Correct Answer
Porter's 5 Forces
Explanation
Please review the Discounted Cash Flow (DCF) Analysis section.

Comparable Company & Precedent Transactions

44
Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The
exercise price of these options is $3.75. The company also has $200,000 of convertible bonds with an
effective conversion price of $4.00. The average market share price for the reporting period is $7.50. What is
the diluted shares outstanding using the treasury stock method & if-converted methods?
Your Answer
342,000
Correct Answer
342,000
Explanation
Additional shares issued if options are converted = 26,000 - (26,000 x $3.75 / $7.50) = 13,000

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Shares issued if convertible bonds are converted = $200,000 / $4.00 = 50,000

Diluted shares outstanding = Basic shares outstanding + Dilution from options + Dilution from convertible
debt = 279,000 + 13,000 + 50,000 = 342,000

Transaction Costs
45
Total expected equity financing for Amazon’s purchase of Walmart, at the assumed 50-50% equity and debt
financing deal mix provided, is as follows:
Your Answer
$241,356
Correct Answer
$241,356
Explanation
None.

46
Total transaction costs, based on the assumptions provided, are expected to be:
Your Answer
$22,002
Correct Answer
$22,002
Explanation
None.

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Pro-forma Adjustments
47
The incremental annual depreciation expense as a result of Amazon’s acquisition of Facebook, is expected
to be:
Your Answer
$36,847
Correct Answer
$36,847
Explanation
None.

48
Additional annual interest expense due to new debt issued in relation to the transaction is:
Your Answer
$7,482
Correct Answer
$7,482
Explanation
None.

Merger Model
49
The implied enterprise value of Snap Inc., calculated using the assumptions and acquisition premium
provided, is:

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Your Answer
$91,669
Correct Answer
$91,669
Explanation
None.

50
The expected pro-forma share price of Amazon is expected to be:

Your Answer
$3,143.69
Correct Answer
$3,099.40
Explanation
84%
Accounting
50%
Budgeting & Forecasting
93%
Excel
100%
Finance
100%
Financial Modeling
81%

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Presentation
65%
Strategy
100%
Valuation
100%

1
What is Gross Profit in 2028E using the assumptions listed above and on the Control Panel?

Your Answer
$17,545
Correct Answer
$17,545
Explanation
None.

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What is EBITDA in 2022E using the assumptions listed above and on the Control Panel?
Your Answer
$18,911
Correct Answer
$18,911
Explanation
None.

3
What is Cash Generated From Operating Activities in 2025E using the assumptions listed above and on the
Control Panel?
Your Answer
$13,523
Correct Answer
$13,523
Explanation
None.

4
What is the PP&E balance in 2030E using the assumptions listed above and on the Control Panel?

Your Answer
$136,122
Correct Answer
$136,122
Explanation

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None.

5
What is the cash ratio in 2025E using the assumptions listed above and on the Control Panel?
Your Answer
4.9x
Correct Answer
4.9x
Explanation
None.

6
What is the margin impact ratio in 2026E using the assumptions listed above and on the Control Panel?
Your Answer
0.19x
Correct Answer
0.19x
Explanation
None.

7
What is the cash turnover ratio in 2029E using the assumptions listed above and on the Control Panel? Is it
higher or lower than the same ratio in 2020?
Your Answer
1.68x; higher
Correct Answer
1.68x; higher

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Explanation
None.

8
What is the risk-free rate?
Your Answer
2.5%
Correct Answer
2.5%
Explanation
None.

9
Based on a discounted cash flow analysis and using the WACC as the discount rate, what is the implied
equity value of Company XYZ on January 1, 2021?
Your Answer
$73,712
Correct Answer
$73,712
Explanation
None.

10
What is the implied equity value at the transaction date (June 15, 2024) based on a discounted cash flow
analysis using the WACC as the discount rate, and assuming $50 million of cash and zero debt?
Your Answer

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$95,102
Correct Answer
$95,102
Explanation
None.

11
Assuming an investment is made on June 15, 2024 in an amount equal to 1.5x the equity value at that date,
what is the investor IRR?

Your Answer
-6.30%
Correct Answer
-6.30%
Explanation
None.

12
Assuming an investment is made on June 15, 2024 in an amount equal to 1.5x the equity value at that date,
what is the equity IRR if the investment is funded with 70% debt?
Your Answer
12.0%
Correct Answer
12.0%
Explanation
None.

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13
Where would 'changes in accounts payable' most likely appear on a cash flow statement?
Your Answer
Under cash flows from 'operating activities'
Correct Answer
Under cash flows from 'operating activities'
Explanation
None.

14
Which is not a type of note found in a set of financial statements?
Your Answer
Significant internal controls
Correct Answer
Significant internal controls
Explanation
None.

15

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Given the above screenshot, what is the resulting value in cell D22?
Your Answer
FALSE
Correct Answer
FALSE
Explanation
The default for an IF statement is to output FALSE if the logical test does not hold true. In order to produce
"ERROR" the formula should be =IF(D8=D20,"OK","ERROR")

16
Free Cash Flow 100
Growth rate 2%
Tax Rate 1%
Cost of Capital 5%
Debt-to-total value 50%

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Given the data in the above table, what is the terminal value of the business (using the growing perpetuity
formula)?
Your Answer
3400
Correct Answer
3400
Explanation
Terminal Value = [Free Cash Flow X (1+growth)]/[(Cost of capital – growth)]
PV = [100 X (1+0.02)]/[0.05-0.02] = 3400

17
Cost of Equity 5%
Cost of debt 7%
% Debt 60%
% Equity 40%

Given the data in the above table, what is the weighted average cost of capital of this company?
Your Answer
6.2%
Correct Answer
6.2%
Explanation
The Weighted Average Cost of Capital (WACC) is the proportion of debt and equity a firm has, multiplied by
their respective costs.

WACC = (0.6 X 0.07) + (0.4 X 0.05 )= 0.062 = 6.2%

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18
Calculate a three-day weighted moving average for the price of the stock for the end of Day 7 where the
most recent price has a weight of 3, the next has a weight of 2, and the oldest price has a weight of 1. Day 1
- 62.00; Day 2 - 56.00; Day 3 - 50.00; Day 4 - 60.00; Day 5 - 59.00; Day 6 - 55.00; Day 7 - 59.00; Day 8 -
63.00
Your Answer
57.17
Correct Answer
57.67
Explanation
3 day weighted moving average = 59 x 1/6 + 55 x 2/6 + 59 x 3/6

19
Which of the following items are not included in working capital?
Your Answer
Short term investments
Correct Answer
Short term investments
Explanation
The 3 components that affect working capital is receivables, payables and inventory.

20
What actions could a company take to reduce its working capital funding gap?
Your Answer
Tighten customer credit terms
Correct Answer

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Tighten customer credit terms

Explanation
Increasing inventory would mean more working capital is tied up, so it would not decrease working capital.
21
The net profit margin ratio can mathematically be broken down as "Tax impact x Capital structure impact x..."
Your Answer
EBIT / Sales
Correct Answer
EBIT / Sales
Explanation
Net profit margin ratio = Tax impact x Capital structure impact x Margin impact

Margin Impact = EBIT / Sales

22
Horizontal analysis allows us to analyze performance over:
Your Answer
Time
Correct Answer
Time
Explanation
Horizontal analysis analyzes variance across time.

23
What is the forecasted value of property, plan and equipment (PP&E) based on the following information:

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 Capital asset turnover ratio: 2.5

 Forecasted revenues: $120
 Forecasted costs of goods sold: $80

Your Answer
48
Correct Answer
48
Explanation
Forecasted value of PP&E = 120/2.5 = 48

24
What formula below can be used to forecast inventory?
Your Answer
(Inventory days / 365) x Cost of sales
Correct Answer
(Inventory days / 365) x Cost of sales
Explanation
Forecasted inventory = (Inventory days / 365) x Cost of sales

25
Which Excel function or tool will you use to display the cells that are referred to by a formula in the selected
cell?
Your Answer
Trace Precedents
Correct Answer
Trace Precedents

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Explanation
None.

26
Which of the following is the correct definition for free cash flows to the firm?
Your Answer
EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working Capital - Capex
Correct Answer
EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working Capital - Capex
Explanation
Free Cash Flow = EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working Capital - Capex

27
How do you find the terminal value using the EV/EBITDA exit multiple?
Your Answer
Terminal EV = EV/EBITDA x EBITDA value of final year of forecast
Correct Answer
Terminal EV = EV/EBITDA x EBITDA value of final year of forecast
Explanation
The EBITDA value used must be the EBITDA value of the final year of forecast.

28
Based on the course, which of the following ratios commonly estimates the terminal value in a discounted
cash flow (DCF) analysis?
Your Answer
EV/EBITDA

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Correct Answer
EV/EBITDA
Explanation
EV/EBITDA is commonly used to estimate the terminal value in a DCF analysis (Exit Multiple) because
EV/EBITDA measures the value of the entire company generated from the core business operations. This
multiple best estimates the value of a company past the forecast period.

29
To find out the value of the assumptions that are needed to hit a certain budget target, you would use
______; to optimize an output, you would use ______.
Your Answer
Goal seek, solver
Correct Answer
Goal seek, solver
Explanation
You would use goal seek and solver, because pivot table is used to perform analysis on the data, while
consolidate is to summarize data from separate sheets onto one sheet.

30
Identify which trait below about incremental budgeting is FALSE.
Your Answer
Inputs or activities are determined by the budgeted outputs
Correct Answer
Inputs or activities are determined by the budgeted outputs
Explanation

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"Inputs or activities are determined by the budgeted outputs" This describes activity-based budgeting, not
incremental budgeting.

31
Identify which of the following is not a goal of the variance dashboard.
Your Answer
A detailed written report
Correct Answer
A detailed written report
Explanation
A dashboard should be a visual report. It should be light on words and use graphics to convey the
information.

32
What does variable cost with economies of scale mean?
Your Answer
The higher the volume of output, the less it costs to produce one extra unit
Correct Answer
The higher the volume of output, the less it costs to produce one extra unit
Explanation
When there is a variable cost with economies of scale, the cost and volume is in a quadratic relationship, not
linear. Although the total costs increase when you increase in production, the individual cost per unit
decreases.

33
To arrive at operating cash flows, you should start with _______, _______ non-cash items and then adding
or subtracting changes in working capital.

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Your Answer
net income, adding
Correct Answer
net income, adding
Explanation
None.

34
The annual accounts payable is 4,800; the annual revenue is 75,000, and the gross profit margin is 40%.
The payable days estimated from the data above is ______.
Your Answer
39
Correct Answer
39
Explanation
Payable days = (4,800 / (75,000 x (1-40%)) x 365 = 39

35
The opening balance of Company A is 25,000, and the repayment is scheduled for 1,000 per month at an
annual interest rate of 5%. Use the average debt balance to calculate the interest payment.

The closing balance of debt at the end of the month is _____ and the interest payment is _____.
Your Answer
24,000; 102
Correct Answer
24,000; 102
Explanation

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Closing balance = 25,000 - 1,000 = 24,000

Interest payment = (25,000 + 24,000) /2 x 5% /12 = 102

36
When performing a scenario analysis, which of the following tools/functions in Excel is used to create a
dropdown list where we can select the live case?
Your Answer
Data Validation
Correct Answer
Data Validation
Explanation
Data Validation is used to create a switch for the live case which the user wants to test to see how changes
in multiple inputs impact the output.

Data Table, Tornado Chart and the INDEX MATCH MATCH function are used to perform a sensitivity
analysis.

37

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The formula contained in the yellow highlighted cell (I39) is = 1. ( 2. , I9,I24). This formula can be
copied over to the entire live scenario section without any manual modification. (Hint: do not forget to use
absolute references.)
Your Answer

1. choose
2. $1$4

Correct Answer

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1. CHOOSE
2. $I$4

Explanation
The formula is =CHOOSE($I$4,I9,I24)

38
Building a heat map would be an appropriate way to visualize data in which of the following?
Your Answer
Sensitivity Analysis
Correct Answer
Sensitivity Analysis
Explanation
A heat map is a great way to visualize sensitivity analysis. Emphasizing data on the high and low end can
really elevate presentation. A sample heat map is given below.

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39
Under which tab in Excel would you be able to open the Page Break Preview?
Your Answer
View
Correct Answer
View
Explanation
Page Break Preview is found under the View tab in the Workbook Views section. Page Break Preview is
particularly helpful if you plan to print out a dashboard or a financial model.

40
To create a bullet chart as shown below, you should first select the data and insert a:

Your Answer
Stacked column chart
Correct Answer
Stacked bar chart
Explanation
None.
41

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Suppose you want to copy a table from Excel and paste onto a PowerPoint slide. Which of the following
Excel shortcuts ONLY allows you to paste as a table?
Your Answer
CTRL + V
Correct Answer
CTRL + V
Explanation
The default in PowerPoint is to paste a table from Excel as a table in PowerPoint. In order to paste the table
as an image, you must use the paste special function. CTRL + V is the only option that does not open Paste
Special.

42
Which tab allows you to add guides (guidelines) to help design your pitchbook?
Your Answer
View
Correct Answer
View
Explanation
Available in Show under the View tab.

43
Please sort the following into PEST Analysis, Porter's 5 Forces, Competitive Advantage
Analysis and SWOT Analysis
Weaknesses

Your Answer
SWOT Analysis

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Correct Answer
SWOT Analysis

Economic Forecasting

Your Answer
PEST
Correct Answer
PEST

Cost Leadership

Your Answer
Competitive Advantage Analysis
Correct Answer
Competitive Advantage Analysis

Differentiation

Your Answer
Competitive Advantage Analysis
Correct Answer
Competitive Advantage Analysis

Social Forecasting

Your Answer
PEST
Correct Answer
PEST

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Opportunities

Your Answer
SWOT Analysis
Correct Answer
SWOT Analysis

Potential new entrants and barriers to entry

Your Answer
Porter's 5 Forces
Correct Answer
Porter's 5 Forces

Technological Forecasting

Your Answer
PEST
Correct Answer
PEST

Suppliers and their bargaining power

Your Answer
Porter's 5 Forces
Correct Answer
Porter's 5 Forces
Explanation
Please review the Discounted Cash Flow (DCF) Analysis section.

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Comparable Company & Precedent Transactions

44
Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The
exercise price of these options is $3.75. The company also has $200,000 of convertible bonds with an
effective conversion price of $4.00. The average market share price for the reporting period is $7.50. What is
the diluted shares outstanding using the treasury stock method & if-converted methods?
Your Answer
342,000
Correct Answer
342,000
Explanation
Additional shares issued if options are converted = 26,000 - (26,000 x $3.75 / $7.50) = 13,000

Shares issued if convertible bonds are converted = $200,000 / $4.00 = 50,000

Diluted shares outstanding = Basic shares outstanding + Dilution from options + Dilution from convertible
debt = 279,000 + 13,000 + 50,000 = 342,000

Transaction Costs
45
Total expected equity financing for Amazon’s purchase of Walmart, at the assumed 50-50% equity and debt
financing deal mix provided, is as follows:
Your Answer
$241,356

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Correct Answer
$241,356
Explanation
None.

46
Total transaction costs, based on the assumptions provided, are expected to be:
Your Answer
$22,002
Correct Answer
$22,002
Explanation
None.

Pro-forma Adjustments
47
The incremental annual depreciation expense as a result of Amazon’s acquisition of Facebook, is expected
to be:
Your Answer
$36,847
Correct Answer
$36,847
Explanation
None.

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48
Additional annual interest expense due to new debt issued in relation to the transaction is:
Your Answer
$7,482
Correct Answer
$7,482
Explanation
None.

Merger Model
49
The implied enterprise value of Snap Inc., calculated using the assumptions and acquisition premium
provided, is:
Your Answer
$91,669
Correct Answer
$91,669
Explanation
None.

50
The expected pro-forma share price of Amazon is expected to be:

Your Answer
$3,099.40

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Correct Answer
$3,099.40
Explanation
None.

93%
Scores By Category
Accounting
100%
Budgeting & Forecasting
100%
Excel
100%
Finance
86%
Financial Modeling
100%
Presentation
62%
Strategy
100%
Valuation
100%

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