FMVA Final Exam: Questions With Solutions (Solved)
Within how many months of the balance sheet date is a current liability
usually payable? Right Ans - 12 months
What is an advantage to using a multi-step income statement? Right Ans -
Direct expenses and indirect expenses are broken out separately
The result of =ROUND(513.2413,2) is __ Right Ans - 513.24
Which of the following is not a function of public accounting firms? Right
Ans - Financial Planning & Analysis
Which of the following is the correct ordering of the capital stack (from most
secure to least secure)? Right Ans - Senior debt -> Subordinated debt->
Equity
What does a diagram of a perfectly positive correlation look like? Right Ans
- A perfectly straight line that slopes from the bottom left to the top right
quardrant
If the total assets to equity ratio of a company is increasing, it is possible that:
Right Ans - 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? Right Ans - Operating profit margin. ROE = Total
asset turnover x Financial leverage x Net profit margin.
Working capital movement is included in which section of the cash flow
statement? Right Ans - Operating activities. Working capital is used in
operations, so it should be included in the operations section of the cash flow
statement.
When calculating the quick ratio or "acid test" which current asset or liability
is omitted? Right Ans - Inventory. Inventory is removed from quick ratio
because it assumes that inventories cannot be sold as fast as other current
assets.
, What's the forecasted capital expenditure based on the information below?
Net PP&E beginning of period: 15,000
Net PP&E end of period: 17,500
Depreciation expenses: 2,400 Right Ans - 4,900. Capital expenditure =
17,500 - 15,000 + 2,400 = 4,900
Complex financial models are all of the following EXCEPT: Right Ans - They
are easy to follow and audit. Complex financial models although having more
precision and predictability, are difficult to follow and audit.
Which of the following items can be found in a published cash flow statement
under "operating activities"? Select ALL correct answers. Right Ans -
Depreciation & Changes in operating assets and liabilities
What is the cost of equity using the capital asset pricing model if the risk free
rate is 4.5%, the beta is 1.75 and the equity risk premium is 4.25%? Right
Ans - 11.94%. Cost of equity = 4.5% + 1.75 x 4.25% = 11.94%
Comparable company analysis Right Ans - 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
Precedent transaction analysis Right Ans - Includes takeover premium /
control premium
Includes synergy value
Shows the value investors paid for the entire company (not just 1 share)
Which of the following is the correct definition for free cash flows to the firm?
Right Ans - EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working
Capital - Capex
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
______. Right Ans - Goal seek, solver. 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.
Within how many months of the balance sheet date is a current liability
usually payable? Right Ans - 12 months
What is an advantage to using a multi-step income statement? Right Ans -
Direct expenses and indirect expenses are broken out separately
The result of =ROUND(513.2413,2) is __ Right Ans - 513.24
Which of the following is not a function of public accounting firms? Right
Ans - Financial Planning & Analysis
Which of the following is the correct ordering of the capital stack (from most
secure to least secure)? Right Ans - Senior debt -> Subordinated debt->
Equity
What does a diagram of a perfectly positive correlation look like? Right Ans
- A perfectly straight line that slopes from the bottom left to the top right
quardrant
If the total assets to equity ratio of a company is increasing, it is possible that:
Right Ans - 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? Right Ans - Operating profit margin. ROE = Total
asset turnover x Financial leverage x Net profit margin.
Working capital movement is included in which section of the cash flow
statement? Right Ans - Operating activities. Working capital is used in
operations, so it should be included in the operations section of the cash flow
statement.
When calculating the quick ratio or "acid test" which current asset or liability
is omitted? Right Ans - Inventory. Inventory is removed from quick ratio
because it assumes that inventories cannot be sold as fast as other current
assets.
, What's the forecasted capital expenditure based on the information below?
Net PP&E beginning of period: 15,000
Net PP&E end of period: 17,500
Depreciation expenses: 2,400 Right Ans - 4,900. Capital expenditure =
17,500 - 15,000 + 2,400 = 4,900
Complex financial models are all of the following EXCEPT: Right Ans - They
are easy to follow and audit. Complex financial models although having more
precision and predictability, are difficult to follow and audit.
Which of the following items can be found in a published cash flow statement
under "operating activities"? Select ALL correct answers. Right Ans -
Depreciation & Changes in operating assets and liabilities
What is the cost of equity using the capital asset pricing model if the risk free
rate is 4.5%, the beta is 1.75 and the equity risk premium is 4.25%? Right
Ans - 11.94%. Cost of equity = 4.5% + 1.75 x 4.25% = 11.94%
Comparable company analysis Right Ans - 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
Precedent transaction analysis Right Ans - Includes takeover premium /
control premium
Includes synergy value
Shows the value investors paid for the entire company (not just 1 share)
Which of the following is the correct definition for free cash flows to the firm?
Right Ans - EBIT x (1 - Tax Rate) + Depreciation +/- Changes in Working
Capital - Capex
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
______. Right Ans - Goal seek, solver. 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.
