FINANCIAL STATEMENT MODELLING EXAM QUESTIONS
AND CORRECT ANSWERS| ACCURATE REAL EXAM WITH
FREQUENTLY TESTED QUESTIONS AND
RATIONALE|ALREADY A GRADED|GUARANTEED
PASS|LATEST UPDATE 2024/2025.
Price earnings ratio - CORRECT ANSWER Market price per share/EPS
to measure how expensive a company's stock is compared to EPS
Which formula is used to check that a Balance Sheet has been built correctly? - CORRECT
ANSWER Total Assets = Total Liabilities + Stockholders' Equity
How do you calculate Inventory Turns? - CORRECT ANSWER COGS / Inventory
How do you calculate Days Sales Outstanding? - CORRECT ANSWER Accounts Receivable /
Revenue * 365
We can project prepaid expenses by assuming its percentage of... - CORRECT ANSWER
Revenue
How do you calculate Net Working Capital? - CORRECT ANSWER Total non-cash current
assets - Total non-debt current liabilities
Depreciation is to PP&E as Amortization is to... - CORRECT ANSWER Intangible Assets.
We use this driver to project Capex: - CORRECT ANSWER % of revenue
When calculating the ending balance of a line item in a projected year, we reference last year's
ending balance as the beginning balance (T or F) - CORRECT ANSWER TRUE
Beginning Intangible Balance is $10 million; Amortization = $1.5 million; Additions = $0.75
million. What is the ending balance? - CORRECT ANSWER $9.25 million
Assuming Intangible Balance is 10.0 in C11, amortization is -1.5 in C12, and additions is 0.75 in
C13, how would you quickly calculate ending Tangible Balance in C14? - CORRECT
ANSWER Alt + =
In the Cash Flow Statement, we add back Depreciation and Amortization to Net Income
because... - CORRECT ANSWER They are non-cash expenses
In what section of the cash flow statement does Capex belong? - CORRECT ANSWER
Investing
Share repurchases decrease Stockholder's Equity (T or F) - CORRECT ANSWER True
,How do we project Dividends? - CORRECT ANSWER Assumed Dividend Payout Ratio *
Projected Net Income
How do we link the Cash Flow Statement (CFS) to the Balance Sheet (BS)? - CORRECT
ANSWER (CFS) Ending Cash = (BS) Same Year's Cash Balance
Debt issuance decreases long-term debt (T or F) - CORRECT ANSWER False
What is a revolver? - CORRECT ANSWER A corporation's "credit card" that is used to finance
working capital needs
WSO's Banana Stand has an average revolver balance of $10 million with an interest rate of 5%.
It also has an average long-term debt balance of $50 million with an interest rate of 2.5%. What
is its total interest expense for the year? - CORRECT ANSWER $1.75 million
Circularity is caused when you have multiple cells' formulas referencing each other. (T or F) -
CORRECT ANSWER True
WSO's Banana Stand has a total interest expense of $2 million and has $100 million in cash that
earns 1%. What is its net interest expense (income)? - CORRECT ANSWER $1 million
Which of these activities is not dilutive (anti-dilutive)? - CORRECT ANSWER Share
Repurchasing
We use basic shares outstanding when calculating EPS (T or F) - CORRECT ANSWER False
A company announces that it expects to spend $1 million on buybacks in the upcoming year. If
its shares are projected to have an average price of $250, how many shares will be repurchased? -
CORRECT ANSWER 4000
A model has these projections and assumptions: $20 million of Net Income, shares trade at 20.0x
earnings, and 1 million shares outstanding. What is the projected share price? - CORRECT
ANSWER 400 (Projected Share Price = Earnings Multiple * EPS)
A dilutive activity increases the amount of shares outstanding (T or F) - CORRECT ANSWER
True
Which one of these is not a type of revenue build-up? - CORRECT ANSWER Overall Sales
Once you have the data table highlighted, how to you create a sensitivity table? - CORRECT
ANSWER Alt - A - W - T
Which Excel tool would we use to build a way to evaluate multiple scenarios? - CORRECT
ANSWER Data Validation
,A Depreciation Waterfall is a type of Depreciation Schedule that aggregates depreciation of
existing PP&E and new Capex. (T or F) - CORRECT ANSWER True
What do you do after clicking on "Record Macro"? - CORRECT ANSWER Do the repetitive
task you want the Macro to do for you automatically.
What is the shortcut used to move up one excel sheet? - CORRECT ANSWER CTRL + Page
Up
What is the purpose of color coding the font of cells? - CORRECT ANSWER To show where
calculations are being made,
To determine where assumptions are being input,
To make auditing an excel file easier
Why do we use "Center Across Selection" instead of "Merge and Center"? - CORRECT
ANSWER It will still allow you to select entire columns / rows while Merge and Center does not
allow that
What is the purpose of using drop down lists in excel? - CORRECT ANSWER Prevent errors
by limiting inputs
What color should a cell font be that is linked to another sheet? - CORRECT ANSWER Green
155
Your cash flow statement will not include the following: - CORRECT ANSWER Revenue
Growth
What is the purpose of using the EOMonth formula in excel? - CORRECT ANSWER To
standardize ending days of months,
To calculate forward ad backward months from the current month,
To automate the modeling out of dates
Where can you find the historical balance sheet? - CORRECT ANSWER 10K, 10Q, Equity
Research
How do we calculate historical revenue growth rate for 2019? - CORRECT ANSWER (2019
Revenue / 2018 Revenue) - 1
Which type of ratio is the inventory turns ratio? - CORRECT ANSWER Efficiency Ratio
How do you calculate days payable outstanding? - CORRECT ANSWER Accounts Payable *
365 / Cost of Goods Sold
We can project cost of goods sold by assuming it's a percentage of... - CORRECT ANSWER
Revenue
, What do current liabilities mean for a company? - CORRECT ANSWER Liabilities that will
become due within the next 12 months
How did we project out prepaid expenses? - CORRECT ANSWER As a % of revenue
How did we project out accrued liabilities? - CORRECT ANSWER As a % of COGS
What is Capex? - CORRECT ANSWER A capital investment made by a company,
Money that is spent to put an asset on the balance sheet,
A cash outflow
Which of the below is true regarding the link from the Balance Sheet to the Cash Flow
Statement? - CORRECT ANSWER Ending cash on both statements must match
Beginning balance = $10M, Capex = $3M, Depreciation= $2M, COGS = $1M. What is the
ending PP&E balance? - CORRECT ANSWER $11M
What does amortization pertain to? - CORRECT ANSWER Intangibles
How did we project out depreciation expense? - CORRECT ANSWER As a % of capex
In which section of the cash flow statement will capital raises be found? - CORRECT ANSWER
Cash flow from financing
What items are included in the cash flow from operations section? - CORRECT ANSWER Net
Income,
D&A,
Working Capital
What items are included in the cash flow from financing section? - CORRECT ANSWER Debt,
Share repurchases,
Dividends
What is the primary purpose of the equity schedule in our model? - CORRECT ANSWER To
calculate the necessary inputs that feed into our cash flow from financing activities,
To calculate share repurchases for the cash flow build,
To calculate dividends for the cash flow build
What metric do we use to project our dividends? - CORRECT ANSWER Dividend payout ratio
Which dividend payout ratio did we use in our projection period? - CORRECT ANSWER
33.8%
What is the change of cash formula in our model? - CORRECT ANSWER Cash Flow from Ops
+ Cash Flow from Investing + Cash Flow From Financing
AND CORRECT ANSWERS| ACCURATE REAL EXAM WITH
FREQUENTLY TESTED QUESTIONS AND
RATIONALE|ALREADY A GRADED|GUARANTEED
PASS|LATEST UPDATE 2024/2025.
Price earnings ratio - CORRECT ANSWER Market price per share/EPS
to measure how expensive a company's stock is compared to EPS
Which formula is used to check that a Balance Sheet has been built correctly? - CORRECT
ANSWER Total Assets = Total Liabilities + Stockholders' Equity
How do you calculate Inventory Turns? - CORRECT ANSWER COGS / Inventory
How do you calculate Days Sales Outstanding? - CORRECT ANSWER Accounts Receivable /
Revenue * 365
We can project prepaid expenses by assuming its percentage of... - CORRECT ANSWER
Revenue
How do you calculate Net Working Capital? - CORRECT ANSWER Total non-cash current
assets - Total non-debt current liabilities
Depreciation is to PP&E as Amortization is to... - CORRECT ANSWER Intangible Assets.
We use this driver to project Capex: - CORRECT ANSWER % of revenue
When calculating the ending balance of a line item in a projected year, we reference last year's
ending balance as the beginning balance (T or F) - CORRECT ANSWER TRUE
Beginning Intangible Balance is $10 million; Amortization = $1.5 million; Additions = $0.75
million. What is the ending balance? - CORRECT ANSWER $9.25 million
Assuming Intangible Balance is 10.0 in C11, amortization is -1.5 in C12, and additions is 0.75 in
C13, how would you quickly calculate ending Tangible Balance in C14? - CORRECT
ANSWER Alt + =
In the Cash Flow Statement, we add back Depreciation and Amortization to Net Income
because... - CORRECT ANSWER They are non-cash expenses
In what section of the cash flow statement does Capex belong? - CORRECT ANSWER
Investing
Share repurchases decrease Stockholder's Equity (T or F) - CORRECT ANSWER True
,How do we project Dividends? - CORRECT ANSWER Assumed Dividend Payout Ratio *
Projected Net Income
How do we link the Cash Flow Statement (CFS) to the Balance Sheet (BS)? - CORRECT
ANSWER (CFS) Ending Cash = (BS) Same Year's Cash Balance
Debt issuance decreases long-term debt (T or F) - CORRECT ANSWER False
What is a revolver? - CORRECT ANSWER A corporation's "credit card" that is used to finance
working capital needs
WSO's Banana Stand has an average revolver balance of $10 million with an interest rate of 5%.
It also has an average long-term debt balance of $50 million with an interest rate of 2.5%. What
is its total interest expense for the year? - CORRECT ANSWER $1.75 million
Circularity is caused when you have multiple cells' formulas referencing each other. (T or F) -
CORRECT ANSWER True
WSO's Banana Stand has a total interest expense of $2 million and has $100 million in cash that
earns 1%. What is its net interest expense (income)? - CORRECT ANSWER $1 million
Which of these activities is not dilutive (anti-dilutive)? - CORRECT ANSWER Share
Repurchasing
We use basic shares outstanding when calculating EPS (T or F) - CORRECT ANSWER False
A company announces that it expects to spend $1 million on buybacks in the upcoming year. If
its shares are projected to have an average price of $250, how many shares will be repurchased? -
CORRECT ANSWER 4000
A model has these projections and assumptions: $20 million of Net Income, shares trade at 20.0x
earnings, and 1 million shares outstanding. What is the projected share price? - CORRECT
ANSWER 400 (Projected Share Price = Earnings Multiple * EPS)
A dilutive activity increases the amount of shares outstanding (T or F) - CORRECT ANSWER
True
Which one of these is not a type of revenue build-up? - CORRECT ANSWER Overall Sales
Once you have the data table highlighted, how to you create a sensitivity table? - CORRECT
ANSWER Alt - A - W - T
Which Excel tool would we use to build a way to evaluate multiple scenarios? - CORRECT
ANSWER Data Validation
,A Depreciation Waterfall is a type of Depreciation Schedule that aggregates depreciation of
existing PP&E and new Capex. (T or F) - CORRECT ANSWER True
What do you do after clicking on "Record Macro"? - CORRECT ANSWER Do the repetitive
task you want the Macro to do for you automatically.
What is the shortcut used to move up one excel sheet? - CORRECT ANSWER CTRL + Page
Up
What is the purpose of color coding the font of cells? - CORRECT ANSWER To show where
calculations are being made,
To determine where assumptions are being input,
To make auditing an excel file easier
Why do we use "Center Across Selection" instead of "Merge and Center"? - CORRECT
ANSWER It will still allow you to select entire columns / rows while Merge and Center does not
allow that
What is the purpose of using drop down lists in excel? - CORRECT ANSWER Prevent errors
by limiting inputs
What color should a cell font be that is linked to another sheet? - CORRECT ANSWER Green
155
Your cash flow statement will not include the following: - CORRECT ANSWER Revenue
Growth
What is the purpose of using the EOMonth formula in excel? - CORRECT ANSWER To
standardize ending days of months,
To calculate forward ad backward months from the current month,
To automate the modeling out of dates
Where can you find the historical balance sheet? - CORRECT ANSWER 10K, 10Q, Equity
Research
How do we calculate historical revenue growth rate for 2019? - CORRECT ANSWER (2019
Revenue / 2018 Revenue) - 1
Which type of ratio is the inventory turns ratio? - CORRECT ANSWER Efficiency Ratio
How do you calculate days payable outstanding? - CORRECT ANSWER Accounts Payable *
365 / Cost of Goods Sold
We can project cost of goods sold by assuming it's a percentage of... - CORRECT ANSWER
Revenue
, What do current liabilities mean for a company? - CORRECT ANSWER Liabilities that will
become due within the next 12 months
How did we project out prepaid expenses? - CORRECT ANSWER As a % of revenue
How did we project out accrued liabilities? - CORRECT ANSWER As a % of COGS
What is Capex? - CORRECT ANSWER A capital investment made by a company,
Money that is spent to put an asset on the balance sheet,
A cash outflow
Which of the below is true regarding the link from the Balance Sheet to the Cash Flow
Statement? - CORRECT ANSWER Ending cash on both statements must match
Beginning balance = $10M, Capex = $3M, Depreciation= $2M, COGS = $1M. What is the
ending PP&E balance? - CORRECT ANSWER $11M
What does amortization pertain to? - CORRECT ANSWER Intangibles
How did we project out depreciation expense? - CORRECT ANSWER As a % of capex
In which section of the cash flow statement will capital raises be found? - CORRECT ANSWER
Cash flow from financing
What items are included in the cash flow from operations section? - CORRECT ANSWER Net
Income,
D&A,
Working Capital
What items are included in the cash flow from financing section? - CORRECT ANSWER Debt,
Share repurchases,
Dividends
What is the primary purpose of the equity schedule in our model? - CORRECT ANSWER To
calculate the necessary inputs that feed into our cash flow from financing activities,
To calculate share repurchases for the cash flow build,
To calculate dividends for the cash flow build
What metric do we use to project our dividends? - CORRECT ANSWER Dividend payout ratio
Which dividend payout ratio did we use in our projection period? - CORRECT ANSWER
33.8%
What is the change of cash formula in our model? - CORRECT ANSWER Cash Flow from Ops
+ Cash Flow from Investing + Cash Flow From Financing
