Financial Modeling Exam questions with answers

Financial Modeling Exam questions with |\ |\ |\ |\ |\




answers

Which are the two points that identify the break even unit
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sales? - CORRECT ANSWERS ✔✔1. Where the Sales
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revenue line crosses the Total costs line |\ |\ |\ |\ |\ |\




2. Where accounting profit hits zero and changes from
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negative to positive |\ |\




What is the formula for accounting profit? - CORRECT
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ANSWERS ✔✔Revenue - Total Costs, because |\ |\ |\ |\ |\




Describe and Explain the relationship between NPV and |\ |\ |\ |\ |\ |\ |\ |\



Year 1 Unit Sales - CORRECT ANSWERS ✔✔They have a
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direct relationship because PV of Net cash flows rises as
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year 1 unit sales rises
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Is NPV more sensitive to Year 1 Unit sales or year 2 sales
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growth rate? - CORRECT ANSWERS ✔✔NPV is more
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sensitive to growth rate because growth rate is |\ |\ |\ |\ |\ |\ |\ |\



compounded


List the general steps used to forecast the financial
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statements - CORRECT ANSWERS ✔✔1. Use financial |\ |\ |\ |\ |\ |\ |\

, statements to find which income statement items and |\ |\ |\ |\ |\ |\ |\ |\



balance sheet items are close to being a constant
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percentage of sales and which aren't |\ |\ |\ |\ |\




2 Forecast sales
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3. Apply average historic percentage of sales to generate
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most of the income statement and balance sheet
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4. Use forecasting to generate the rest of teh statements
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5. Make balance sheet balance by calculating longer term
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debt
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6. Raise or lower the portion of equity relatiev to the
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portion of debt by raising/lowering paid in capital
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List 6 major individual income statement and balance
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sheet items that are not constant percentages of sales -
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CORRECT ANSWERS ✔✔1. Depreciation |\ |\ |\




2. Interest Expense
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3. Taxes |\




4. Property Plant and Equipment
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5. Short Term Debt
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6. Long term debt
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Fully describe and explain the relationship between
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external funds needed and sales growth rate - CORRECT
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ANSWERS ✔✔External funds needed is very sensitive to |\ |\ |\ |\ |\ |\ |\ |\