1 | Page
Financial Statement Modeling Questions and
Answers
Which formula is used to check that a Balance Sheet has been built
correctly?
Ans: Total Assets = Total Liabilities + Stockholders' Equity
How do you calculate Inventory Turns?
Ans: COGS / Inventory
How do you calculate Days Sales Outstanding?
Ans: Accounts Receivable / Revenue * 365
We can project prepaid expenses by assuming its percentage of...
Ans: Revenue
How do you calculate Net Working Capital?
Ans: Total non-cash current assets - Total non-debt current liabilities
Depreciation is to PP&E as Amortization is to...
Ans: Intangible Assets.
We use this driver to project Capex:
Ans: % 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)
Ans: TRUE
© 2025 All rights reserved
, 2 | Page
Beginning Intangible Balance is $10 million; Amortization = $1.5
million; Additions = $0.75 million. What is the ending balance?
Ans: $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?
Ans: Alt + =
In the Cash Flow Statement, we add back Depreciation and
Amortization to Net Income because...
Ans: They are non-cash expenses
In what section of the cash flow statement does Capex belong?
Ans: Investing
Share repurchases decrease Stockholder's Equity (T or F)
Ans: True
How do we project Dividends?
Ans: Assumed Dividend Payout Ratio * Projected Net Income
How do we link the Cash Flow Statement (CFS) to the Balance
Sheet (BS)?
Ans: (CFS) Ending Cash = (BS) Same Year's Cash Balance
Debt issuance decreases long-term debt (T or F)
Ans: False
What is a revolver?
Ans: A corporation's "credit card" that is used to finance working capital
needs
© 2025 All rights reserved
Financial Statement Modeling Questions and
Answers
Which formula is used to check that a Balance Sheet has been built
correctly?
Ans: Total Assets = Total Liabilities + Stockholders' Equity
How do you calculate Inventory Turns?
Ans: COGS / Inventory
How do you calculate Days Sales Outstanding?
Ans: Accounts Receivable / Revenue * 365
We can project prepaid expenses by assuming its percentage of...
Ans: Revenue
How do you calculate Net Working Capital?
Ans: Total non-cash current assets - Total non-debt current liabilities
Depreciation is to PP&E as Amortization is to...
Ans: Intangible Assets.
We use this driver to project Capex:
Ans: % 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)
Ans: TRUE
© 2025 All rights reserved
, 2 | Page
Beginning Intangible Balance is $10 million; Amortization = $1.5
million; Additions = $0.75 million. What is the ending balance?
Ans: $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?
Ans: Alt + =
In the Cash Flow Statement, we add back Depreciation and
Amortization to Net Income because...
Ans: They are non-cash expenses
In what section of the cash flow statement does Capex belong?
Ans: Investing
Share repurchases decrease Stockholder's Equity (T or F)
Ans: True
How do we project Dividends?
Ans: Assumed Dividend Payout Ratio * Projected Net Income
How do we link the Cash Flow Statement (CFS) to the Balance
Sheet (BS)?
Ans: (CFS) Ending Cash = (BS) Same Year's Cash Balance
Debt issuance decreases long-term debt (T or F)
Ans: False
What is a revolver?
Ans: A corporation's "credit card" that is used to finance working capital
needs
© 2025 All rights reserved
