CFI FMVA FINAL EXAM 2025/2026
250 ORIGINAL EXAM-STYLE QUESTIONS & VERIFIED
CORRECT SOLUTIONS
Study Edition • Four-choice format • Correct answer shown with a larger green tick in an empty box • Based on CFI’s published FMVA 2026
curriculum and exam overview.
Important: These are original practice questions, not leaked/reproduced CFI final-exam questions, and no study bank can honestly
guarantee a pass. CFI states the final exam is 50 randomized multiple-choice questions, includes Excel modeling case studies, lasts 3
hours, and requires 70% to pass.
Income Statement Cash Flow Balance Sheet
Key statement linkages
Question 1
Which financial statement reports a company’s assets, liabilities, and shareholders’ equity at a point in time?
Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
Solution: The balance sheet is a point-in-time snapshot of assets, liabilities, and equity.
Question 2
Revenue is $12.0 million and cost of goods sold is $7.2 million. What is gross profit?
$4.2 million
$4.8 million
$5.2 million
$19.2 million
Solution: Gross profit = revenue − COGS = $12.0m − $7.2m = $4.8m.
Question 3
A customer pays an invoice that was previously recorded as accounts receivable. What is the immediate effect?
Cash increases and accounts receivable increases
Cash increases and accounts receivable decreases
Revenue increases and cash increases
Liabilities decrease and cash increases
Solution: The collection converts receivables into cash; no new revenue is recognized.
Question 4
Which account is normally classified as a current liability?
Goodwill
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 1
, Inventory
Accounts payable
Property, plant and equipment
Solution: Accounts payable is a short-term obligation normally due within the operating cycle.
Question 5
If depreciation expense increases, holding everything else constant, which effect is most likely?
EBIT increases
Net income increases
Net income decreases
Cash taxes always increase
Solution: Higher depreciation lowers EBIT and taxable income, reducing reported net income.
Question 6
Which statement best describes retained earnings?
Cash held in a bank account
Cumulative earnings retained in the business after distributions
Total market value of equity
Current-year revenue only
Solution: Retained earnings accumulate historical profits less dividends and other applicable adjustments.
Question 7
A prepaid insurance payment is initially recorded as an asset because it represents:
A future economic benefit
A current liability
An equity distribution
Revenue already earned
Solution: Prepaid insurance represents a service the company expects to receive in the future.
Question 8
Under accrual accounting, revenue is generally recognized when:
Cash is necessarily received
The economic performance obligation is satisfied under the applicable accounting framework
An invoice is printed
A bank reconciliation is completed
Solution: Accrual accounting recognizes revenue based on performance/earning rather than simply cash collection.
Question 9
Which ratio primarily measures short-term liquidity?
Current ratio
Gross margin
Debt-to-equity
Return on equity
Solution: The current ratio compares current assets with current liabilities.
Question 10
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 2
, A company has current assets of $900,000 and current liabilities of $600,000. Its current ratio is:
0.67x
1.00x
1.50x
2.00x
Solution: Current ratio = $900k / $600k = 1.50x.
Illustrative Revenue Trend
Not actual company data
Question 11
Vertical analysis of an income statement commonly expresses each line item as a percentage of:
Total assets
Revenue
Equity
Cash
Solution: Income-statement vertical analysis commonly uses revenue as the base.
Question 12
Horizontal analysis is primarily used to evaluate:
Changes in financial statement items over time
Only a company’s tax rate
Only market capitalization
The accounting equation at one date
Solution: Horizontal analysis compares periods to identify growth or decline.
Question 13
If revenue grows 10% while operating expenses grow 4%, all else equal, operating leverage would tend to:
Reduce operating profit growth
Increase operating profit growth relative to revenue
Eliminate fixed costs
Make revenue negative
Solution: A slower growth rate in expenses than revenue generally expands operating profit faster than revenue.
Question 14
Return on equity (ROE) is generally calculated as:
Net income / average shareholders’ equity
Revenue / average assets
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 3
, EBIT / revenue
Cash / current liabilities
Solution: ROE measures profit earned relative to shareholders’ invested equity.
Question 15
A higher inventory turnover generally suggests that inventory is:
Moving through the business more quickly
Always obsolete
Never sold on credit
Recorded as a liability
Solution: Higher turnover generally means inventory is being sold and replenished more rapidly, subject to industry context.
Question 16
Which ratio is a leverage ratio?
Debt-to-equity
Gross margin
Inventory turnover
Current ratio
Solution: Debt-to-equity measures the degree to which a company uses debt relative to equity.
Question 17
If accounts receivable days rise materially while sales are flat, a likely interpretation is:
Customers are paying more slowly
Inventory is moving faster
Debt has disappeared
Gross margin must have increased
Solution: Higher receivable days can indicate slower collections or looser credit terms.
Question 18
EBITDA is commonly interpreted as earnings before:
Interest, taxes, depreciation, and amortization
Inventory, debt, and equity
Revenue and cash
Working capital and sales
Solution: EBITDA excludes interest, taxes, depreciation, and amortization from earnings.
Question 19
Which metric is most directly a profitability margin?
Net profit margin
Debt-to-equity
Current ratio
Receivables days
Solution: Net profit margin = net income / revenue.
Question 20
A company’s gross margin rises from 35% to 40%. Holding revenue constant, gross profit would:
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 4
250 ORIGINAL EXAM-STYLE QUESTIONS & VERIFIED
CORRECT SOLUTIONS
Study Edition • Four-choice format • Correct answer shown with a larger green tick in an empty box • Based on CFI’s published FMVA 2026
curriculum and exam overview.
Important: These are original practice questions, not leaked/reproduced CFI final-exam questions, and no study bank can honestly
guarantee a pass. CFI states the final exam is 50 randomized multiple-choice questions, includes Excel modeling case studies, lasts 3
hours, and requires 70% to pass.
Income Statement Cash Flow Balance Sheet
Key statement linkages
Question 1
Which financial statement reports a company’s assets, liabilities, and shareholders’ equity at a point in time?
Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
Solution: The balance sheet is a point-in-time snapshot of assets, liabilities, and equity.
Question 2
Revenue is $12.0 million and cost of goods sold is $7.2 million. What is gross profit?
$4.2 million
$4.8 million
$5.2 million
$19.2 million
Solution: Gross profit = revenue − COGS = $12.0m − $7.2m = $4.8m.
Question 3
A customer pays an invoice that was previously recorded as accounts receivable. What is the immediate effect?
Cash increases and accounts receivable increases
Cash increases and accounts receivable decreases
Revenue increases and cash increases
Liabilities decrease and cash increases
Solution: The collection converts receivables into cash; no new revenue is recognized.
Question 4
Which account is normally classified as a current liability?
Goodwill
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 1
, Inventory
Accounts payable
Property, plant and equipment
Solution: Accounts payable is a short-term obligation normally due within the operating cycle.
Question 5
If depreciation expense increases, holding everything else constant, which effect is most likely?
EBIT increases
Net income increases
Net income decreases
Cash taxes always increase
Solution: Higher depreciation lowers EBIT and taxable income, reducing reported net income.
Question 6
Which statement best describes retained earnings?
Cash held in a bank account
Cumulative earnings retained in the business after distributions
Total market value of equity
Current-year revenue only
Solution: Retained earnings accumulate historical profits less dividends and other applicable adjustments.
Question 7
A prepaid insurance payment is initially recorded as an asset because it represents:
A future economic benefit
A current liability
An equity distribution
Revenue already earned
Solution: Prepaid insurance represents a service the company expects to receive in the future.
Question 8
Under accrual accounting, revenue is generally recognized when:
Cash is necessarily received
The economic performance obligation is satisfied under the applicable accounting framework
An invoice is printed
A bank reconciliation is completed
Solution: Accrual accounting recognizes revenue based on performance/earning rather than simply cash collection.
Question 9
Which ratio primarily measures short-term liquidity?
Current ratio
Gross margin
Debt-to-equity
Return on equity
Solution: The current ratio compares current assets with current liabilities.
Question 10
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 2
, A company has current assets of $900,000 and current liabilities of $600,000. Its current ratio is:
0.67x
1.00x
1.50x
2.00x
Solution: Current ratio = $900k / $600k = 1.50x.
Illustrative Revenue Trend
Not actual company data
Question 11
Vertical analysis of an income statement commonly expresses each line item as a percentage of:
Total assets
Revenue
Equity
Cash
Solution: Income-statement vertical analysis commonly uses revenue as the base.
Question 12
Horizontal analysis is primarily used to evaluate:
Changes in financial statement items over time
Only a company’s tax rate
Only market capitalization
The accounting equation at one date
Solution: Horizontal analysis compares periods to identify growth or decline.
Question 13
If revenue grows 10% while operating expenses grow 4%, all else equal, operating leverage would tend to:
Reduce operating profit growth
Increase operating profit growth relative to revenue
Eliminate fixed costs
Make revenue negative
Solution: A slower growth rate in expenses than revenue generally expands operating profit faster than revenue.
Question 14
Return on equity (ROE) is generally calculated as:
Net income / average shareholders’ equity
Revenue / average assets
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 3
, EBIT / revenue
Cash / current liabilities
Solution: ROE measures profit earned relative to shareholders’ invested equity.
Question 15
A higher inventory turnover generally suggests that inventory is:
Moving through the business more quickly
Always obsolete
Never sold on credit
Recorded as a liability
Solution: Higher turnover generally means inventory is being sold and replenished more rapidly, subject to industry context.
Question 16
Which ratio is a leverage ratio?
Debt-to-equity
Gross margin
Inventory turnover
Current ratio
Solution: Debt-to-equity measures the degree to which a company uses debt relative to equity.
Question 17
If accounts receivable days rise materially while sales are flat, a likely interpretation is:
Customers are paying more slowly
Inventory is moving faster
Debt has disappeared
Gross margin must have increased
Solution: Higher receivable days can indicate slower collections or looser credit terms.
Question 18
EBITDA is commonly interpreted as earnings before:
Interest, taxes, depreciation, and amortization
Inventory, debt, and equity
Revenue and cash
Working capital and sales
Solution: EBITDA excludes interest, taxes, depreciation, and amortization from earnings.
Question 19
Which metric is most directly a profitability margin?
Net profit margin
Debt-to-equity
Current ratio
Receivables days
Solution: Net profit margin = net income / revenue.
Question 20
A company’s gross margin rises from 35% to 40%. Holding revenue constant, gross profit would:
CFI FMVA 2025/2026 — Original Practice Bank | Study use only Page 4
