CFI FMVA Final Exam 2025 Questions
and Answers
Steps to Financial Analysis - ....ANSWER ...-1. Gather
2. Calculate
3. Analyze
4. Benchmark
Performance Ratios - ....ANSWER ...-Return and Profitability Ratios
Asset Utilization Ratios
Financial Leverage Ratios - ....ANSWER ...-Solvency & Liquidity Ratios
Why Increase Debt rather than equity? - ....ANSWER ...-1. Retaining Ownership
Control
2. Cost of Capital
3. Flexibility
4. Timing & availability
5. Tax advantage
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 1
,Trend (Horizontal) Analysis - ....ANSWER ...-comparing results across different
periods
Financial Model - ....ANSWER ...-Corporate Decisions, Project Finance, Corporate
Transactions, Investment Decisions
Complex Models - ....ANSWER ...-- High detail
- Precise
- Hard to Model
- prone to Error
Simple Models - ....ANSWER ...-- Basic
- Easy to follow
- Lack of Precision
- Overly Simplified
Top Down Analysis - ....ANSWER ...-Start with Total addressable Market and
work down from there based on MKT share and segments
Bottom-Up Analysis - ....ANSWER ...-Start with basic drivers and build up to
revenue
Regressions Analysis - ....ANSWER ...-analyze relationships between revenue and
other factors using the regressions in excel
Year over year analysis - ....ANSWER ...-most basic form
Valuation - ....ANSWER ...-Attributing value to an asset, investment or company
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 2
, Intrinsic Value - DCF - ....ANSWER ...-- Looking at company in isolation w/o
worrying about peers
- future performance
- does not depend on the mood of the market
Relative Value - ....ANSWER ...-- Uses multiple to find the worth of company
- more likely to reflect mood of the mkt
Precedent transactions
- past mergers and acqusitions
- form of valuation includes a takeover premium
Enterprise Value - ....ANSWER ...-Advantages
- More useful when comparing companies with different capital structures
- Minimizes accounting policies relative to net income and earnings per share
Disadvantages
- there are other debt and cash like items that may be difficult to measure
- Less useful for analyzing stocks since enterprise value is total business value and not
equity value
Equity Value - ....ANSWER ...-Advantages
- More Relevant to equity valuation which is just a portion of business
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 3
and Answers
Steps to Financial Analysis - ....ANSWER ...-1. Gather
2. Calculate
3. Analyze
4. Benchmark
Performance Ratios - ....ANSWER ...-Return and Profitability Ratios
Asset Utilization Ratios
Financial Leverage Ratios - ....ANSWER ...-Solvency & Liquidity Ratios
Why Increase Debt rather than equity? - ....ANSWER ...-1. Retaining Ownership
Control
2. Cost of Capital
3. Flexibility
4. Timing & availability
5. Tax advantage
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 1
,Trend (Horizontal) Analysis - ....ANSWER ...-comparing results across different
periods
Financial Model - ....ANSWER ...-Corporate Decisions, Project Finance, Corporate
Transactions, Investment Decisions
Complex Models - ....ANSWER ...-- High detail
- Precise
- Hard to Model
- prone to Error
Simple Models - ....ANSWER ...-- Basic
- Easy to follow
- Lack of Precision
- Overly Simplified
Top Down Analysis - ....ANSWER ...-Start with Total addressable Market and
work down from there based on MKT share and segments
Bottom-Up Analysis - ....ANSWER ...-Start with basic drivers and build up to
revenue
Regressions Analysis - ....ANSWER ...-analyze relationships between revenue and
other factors using the regressions in excel
Year over year analysis - ....ANSWER ...-most basic form
Valuation - ....ANSWER ...-Attributing value to an asset, investment or company
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 2
, Intrinsic Value - DCF - ....ANSWER ...-- Looking at company in isolation w/o
worrying about peers
- future performance
- does not depend on the mood of the market
Relative Value - ....ANSWER ...-- Uses multiple to find the worth of company
- more likely to reflect mood of the mkt
Precedent transactions
- past mergers and acqusitions
- form of valuation includes a takeover premium
Enterprise Value - ....ANSWER ...-Advantages
- More useful when comparing companies with different capital structures
- Minimizes accounting policies relative to net income and earnings per share
Disadvantages
- there are other debt and cash like items that may be difficult to measure
- Less useful for analyzing stocks since enterprise value is total business value and not
equity value
Equity Value - ....ANSWER ...-Advantages
- More Relevant to equity valuation which is just a portion of business
…FOR STUDENTS ONLY…©️2025 ALL RIGHTS RESERVED… 3
