NEW (2025/2026) CFI FMVA EXAM WITH COMPREHENSIVE
AND 100% VERIFIED SOLUTIONS
Which of the following items are not included when determining income from
operations? - ANSWER Taxes
Which ratio would you use to determine the profitability of the goods sold by a
company? - ANSWER Gross profit margin
When performing a vertical analysis which income statement item do you use to
determine the cost contribution for each expense category? (What is the
denominator?) - ANSWER Sales
Horizontal analysis allows us to analyze performance over: - ANSWER Time
When calculating the quick ratio or "acid test" which current asset or liability is
omitted? - ANSWER Inventory
For which organization would you expect to see the highest inventory turnover
ratio? - ANSWER Grocery retailer
What actions could a company take to reduce its working capital funding gap? -
ANSWER Tighten customer credit terms
The debt to equity ratio indicates: - ANSWER The proportion of the company
financed by lenders versus owners
Which of the following items are not included in working capital? - ANSWER
Short term investments
When calculating turnover of property plant & equipment and receivables,
which item from the income statement do we use? - ANSWER Sales
,If a company wanted to finance the purchase of equipment without diluting
shareholders equity, which of the following operation could it consider? -
ANSWER Obtaining a loan from a bank
Working capital movement is included in which section of the cash flow
statement? - ANSWER Operating activities
The debt to tangible net worth ratio is calculated as follows: - ANSWER
Interest Bearing Liabilities / (Equity - Intangible Assets)
If the total assets to equity ratio of a company is increasing, it is possible that: -
ANSWER The company is increasing the use of debt and getting higher
financial leverage
Which ratio is not one of the three ratios that multiply together to produce the
return on equity ratio? - ANSWER Operating profit margin
Which financial leverage ratio is used with two other ratios to mathematically
produce the return on equity ratio? - ANSWER Total Assets / Equity
Which of the following is a tertiary ratio that drives profitability? - ANSWER
SG&A Expense / Sales
Which ratios indicate how efficiently the company generates sales from its
assets? - ANSWER Working capital turnover
The net profit margin ratio can mathematically be broken down as "Tax impact
x Capital structure impact x..." - ANSWER EBIT / Sales
Based on the following information from ABC Company's financial analysis,
which one of the following statements is NOT true? - ANSWER The
company's ability to cover its short-term obligations is getting higher over the
five years.
Which of the following best describes accounting principles in general? -
ANSWER They outline the fundamental rules and concepts and establish the
framework on which detailed accounting standards are based.
, A sound accounting framework allows for all of the following benefits except: -
ANSWER Identical items being reported on the financial statements of different
companies
Conservatism Principle - ANSWER It provides guidance on how to record
transactions when there is uncertainty.
Historical Cost Principle - ANSWER It states that assets and liabilities are
recorded on the financial statements at the cost at which they were acquired or
assumed.
Objectivity Principle - ANSWER It states that financial statements must be free
from bias and based on verifiable evidence.
Economic Entity Principle - ANSWER It states that transactions carried out by
a business are separated from those conducted by its owner.
Matching Principle - ANSWER It states that the expenses of a business should
be recorded in the periods in which the corresponding revenues are earned.
On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid
$960 for the entire program upfront. The program includes a total of 12 sessions
and two sessions are delivered each month. How much revenue from Mr.
Smithe should Fit Co. recognize at the end of March? - ANSWER $160
Which of the following characteristics does not enhance the usefulness of
financial information? - ANSWER Relevance
Identify the statement that is most accurate. - ANSWER Financial information
that has confirmatory value provides feedback that either confirms or changes
previous evaluations.
Which of the following is not a correct description of how an operating lease is
recognized on the financial statements? - ANSWER The amortization expense
of the right-of-use asset is calculated using the straight-line depreciation method
over the lease term.
AND 100% VERIFIED SOLUTIONS
Which of the following items are not included when determining income from
operations? - ANSWER Taxes
Which ratio would you use to determine the profitability of the goods sold by a
company? - ANSWER Gross profit margin
When performing a vertical analysis which income statement item do you use to
determine the cost contribution for each expense category? (What is the
denominator?) - ANSWER Sales
Horizontal analysis allows us to analyze performance over: - ANSWER Time
When calculating the quick ratio or "acid test" which current asset or liability is
omitted? - ANSWER Inventory
For which organization would you expect to see the highest inventory turnover
ratio? - ANSWER Grocery retailer
What actions could a company take to reduce its working capital funding gap? -
ANSWER Tighten customer credit terms
The debt to equity ratio indicates: - ANSWER The proportion of the company
financed by lenders versus owners
Which of the following items are not included in working capital? - ANSWER
Short term investments
When calculating turnover of property plant & equipment and receivables,
which item from the income statement do we use? - ANSWER Sales
,If a company wanted to finance the purchase of equipment without diluting
shareholders equity, which of the following operation could it consider? -
ANSWER Obtaining a loan from a bank
Working capital movement is included in which section of the cash flow
statement? - ANSWER Operating activities
The debt to tangible net worth ratio is calculated as follows: - ANSWER
Interest Bearing Liabilities / (Equity - Intangible Assets)
If the total assets to equity ratio of a company is increasing, it is possible that: -
ANSWER The company is increasing the use of debt and getting higher
financial leverage
Which ratio is not one of the three ratios that multiply together to produce the
return on equity ratio? - ANSWER Operating profit margin
Which financial leverage ratio is used with two other ratios to mathematically
produce the return on equity ratio? - ANSWER Total Assets / Equity
Which of the following is a tertiary ratio that drives profitability? - ANSWER
SG&A Expense / Sales
Which ratios indicate how efficiently the company generates sales from its
assets? - ANSWER Working capital turnover
The net profit margin ratio can mathematically be broken down as "Tax impact
x Capital structure impact x..." - ANSWER EBIT / Sales
Based on the following information from ABC Company's financial analysis,
which one of the following statements is NOT true? - ANSWER The
company's ability to cover its short-term obligations is getting higher over the
five years.
Which of the following best describes accounting principles in general? -
ANSWER They outline the fundamental rules and concepts and establish the
framework on which detailed accounting standards are based.
, A sound accounting framework allows for all of the following benefits except: -
ANSWER Identical items being reported on the financial statements of different
companies
Conservatism Principle - ANSWER It provides guidance on how to record
transactions when there is uncertainty.
Historical Cost Principle - ANSWER It states that assets and liabilities are
recorded on the financial statements at the cost at which they were acquired or
assumed.
Objectivity Principle - ANSWER It states that financial statements must be free
from bias and based on verifiable evidence.
Economic Entity Principle - ANSWER It states that transactions carried out by
a business are separated from those conducted by its owner.
Matching Principle - ANSWER It states that the expenses of a business should
be recorded in the periods in which the corresponding revenues are earned.
On March 1st, Mr. Smithe signed up for a fitness program at Fit Co. and paid
$960 for the entire program upfront. The program includes a total of 12 sessions
and two sessions are delivered each month. How much revenue from Mr.
Smithe should Fit Co. recognize at the end of March? - ANSWER $160
Which of the following characteristics does not enhance the usefulness of
financial information? - ANSWER Relevance
Identify the statement that is most accurate. - ANSWER Financial information
that has confirmatory value provides feedback that either confirms or changes
previous evaluations.
Which of the following is not a correct description of how an operating lease is
recognized on the financial statements? - ANSWER The amortization expense
of the right-of-use asset is calculated using the straight-line depreciation method
over the lease term.
