3 STATEMENT MODELING (CFI) EXAM
QUESTIONS & CORRECT ANSWERS
What is the main goal of each financial statement? - correct answer ✔✔Income: Measures
Profitability
Cashflow Statement: Assess Cashflow
Balance Sheet: Review assets and how they are financed
* Income and Cashflow show us whole period Balance sheet show us at a specific point in time
How are the 3 financial statements connected? - correct answer ✔✔IS connects to CFS through
Net Income
CFS connects to BS through Ending Cash
For Property Plant and Equipment on the balance sheet what is the formula to find it - correct
answer ✔✔PP&E= PP&E (Prior Year)-Capital Expenditures-Depreciation
Two Important aspect of Financial Models - correct answer ✔✔1. Tool to assist with decision
making
2. Figures must be easy to understand
What is the model design - correct answer ✔✔1. Outputs
2. Statements
3. Equity
4. Debt
5. Income Tax
, 6. Assets
7. Depreciation
8. Working Capital
9. Costs
10. Revenue
11. Drivers
12. Inputs
What is the Preferred Model Layout - correct answer ✔✔1. Cover
2. Outputs (Dashboard)
3. Inputs (Drivers and inputs)
*This should be the main presentation
4. Appendix (Financial Statements, Operational Schedules, Capital Structure)
What order does CFI recommend when making the model? - correct answer ✔✔1. Outputs
2. Statements
3. Taxes
4. Drivers
Which of the following are true about Model Drivers?
- We isolate the drivers so that we can test how the model reacts to them
- Little to no understanding of the company is required when choosing drivers
- Drivers only impact the outputs/dashboard of the model
QUESTIONS & CORRECT ANSWERS
What is the main goal of each financial statement? - correct answer ✔✔Income: Measures
Profitability
Cashflow Statement: Assess Cashflow
Balance Sheet: Review assets and how they are financed
* Income and Cashflow show us whole period Balance sheet show us at a specific point in time
How are the 3 financial statements connected? - correct answer ✔✔IS connects to CFS through
Net Income
CFS connects to BS through Ending Cash
For Property Plant and Equipment on the balance sheet what is the formula to find it - correct
answer ✔✔PP&E= PP&E (Prior Year)-Capital Expenditures-Depreciation
Two Important aspect of Financial Models - correct answer ✔✔1. Tool to assist with decision
making
2. Figures must be easy to understand
What is the model design - correct answer ✔✔1. Outputs
2. Statements
3. Equity
4. Debt
5. Income Tax
, 6. Assets
7. Depreciation
8. Working Capital
9. Costs
10. Revenue
11. Drivers
12. Inputs
What is the Preferred Model Layout - correct answer ✔✔1. Cover
2. Outputs (Dashboard)
3. Inputs (Drivers and inputs)
*This should be the main presentation
4. Appendix (Financial Statements, Operational Schedules, Capital Structure)
What order does CFI recommend when making the model? - correct answer ✔✔1. Outputs
2. Statements
3. Taxes
4. Drivers
Which of the following are true about Model Drivers?
- We isolate the drivers so that we can test how the model reacts to them
- Little to no understanding of the company is required when choosing drivers
- Drivers only impact the outputs/dashboard of the model
