FINANCIAL STATEMENT MODELLING EXAM |
2025 COMPREHENSIVE EXAM WITH QUESTIONS
WITH 100% CORRECT VERIFIED ANSWERS
ENSURING A+ GRADE RESULTS
Using historical efficiency ratios to project future working capital line items is
most likely classified as:
A: hybrid approach.
B: top-down approach.
C: bottom-up approach.
C is correct
Angela Green, an investment manager at Horizon Investments, intends to hire a
new investment analyst. After conducting initial interviews, Green has narrowed
the pool to three candidates. She plans to conduct second interviews to further
assess the candidates' knowledge of industry and company analysis. Prior to the
second interviews, Green asks the candidates to analyze Chrome Network
Systems, a company that manufactures internet networking products.
One of the candidates asks Green if she had additional information on Chrome's
industry peers and competitors, to put the profitability estimates in a richer
context. By asking for this additional information for their analysis, candidate is
most likely seeking to mitigate which behavioral bias?
,A: Conservatism
B: Base rate neglect
C: illusion of control
B is correct.
Base rates refer to attributes of a reference class and base rate neglect is ignoring
such class information in favor of specific information. By incorporating industry
data, the candidate is seeking to mitigate this behavioral bias.
Assuming that a company could increase its prices by the same percentage as any
increase in input costs without affecting its sales volume, it is most likely that:
A: both gross profit and gross margin would increase.
B: both gross profit nor gross margin would be unchanged.
C: gross profit would increase and gross margin would be unchanged.
C is correct.
If demand were perfectly inelastic, any increase in a company's input costs could
passed on to customers with an equivalent percentage increase in sales prices
and no change in sales volume.
Which formula is used to check that a Balance Sheet has been built correctly?
Total Assets = Total Liabilities + Stockholders' Equity
How do you calculate Inventory Turns?
, COGS / Inventory
How do you calculate Days Sales Outstanding?
Accounts Receivable / Revenue * 365
We can project prepaid expenses by assuming its percentage of...
Revenue
How do you calculate Net Working Capital?
Total non-cash current assets - Total non-debt current liabilities
Depreciation is to PP&E as Amortization is to...
Intangible Assets.
We use this driver to project Capex:
% 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)
2025 COMPREHENSIVE EXAM WITH QUESTIONS
WITH 100% CORRECT VERIFIED ANSWERS
ENSURING A+ GRADE RESULTS
Using historical efficiency ratios to project future working capital line items is
most likely classified as:
A: hybrid approach.
B: top-down approach.
C: bottom-up approach.
C is correct
Angela Green, an investment manager at Horizon Investments, intends to hire a
new investment analyst. After conducting initial interviews, Green has narrowed
the pool to three candidates. She plans to conduct second interviews to further
assess the candidates' knowledge of industry and company analysis. Prior to the
second interviews, Green asks the candidates to analyze Chrome Network
Systems, a company that manufactures internet networking products.
One of the candidates asks Green if she had additional information on Chrome's
industry peers and competitors, to put the profitability estimates in a richer
context. By asking for this additional information for their analysis, candidate is
most likely seeking to mitigate which behavioral bias?
,A: Conservatism
B: Base rate neglect
C: illusion of control
B is correct.
Base rates refer to attributes of a reference class and base rate neglect is ignoring
such class information in favor of specific information. By incorporating industry
data, the candidate is seeking to mitigate this behavioral bias.
Assuming that a company could increase its prices by the same percentage as any
increase in input costs without affecting its sales volume, it is most likely that:
A: both gross profit and gross margin would increase.
B: both gross profit nor gross margin would be unchanged.
C: gross profit would increase and gross margin would be unchanged.
C is correct.
If demand were perfectly inelastic, any increase in a company's input costs could
passed on to customers with an equivalent percentage increase in sales prices
and no change in sales volume.
Which formula is used to check that a Balance Sheet has been built correctly?
Total Assets = Total Liabilities + Stockholders' Equity
How do you calculate Inventory Turns?
, COGS / Inventory
How do you calculate Days Sales Outstanding?
Accounts Receivable / Revenue * 365
We can project prepaid expenses by assuming its percentage of...
Revenue
How do you calculate Net Working Capital?
Total non-cash current assets - Total non-debt current liabilities
Depreciation is to PP&E as Amortization is to...
Intangible Assets.
We use this driver to project Capex:
% 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)
