ADVENTIS FMC LEVEL 1 TEST PAPER 2025/2026
QUESTIONS AND ANSWERS GRADED A+
✔✔What is the Balance sheet? - ✔✔Shows an organizations financial position at a
particular point in time
✔✔What equation is the Balance sheet centered around? - ✔✔Assets = Liabilities +
Equity
✔✔What does the Balance sheet have on it? - ✔✔Cash, Accounts receivable, fixed
assets, accounts payable, debt, equity
✔✔What is cash? - ✔✔Current assets comprising currency or currency equivalents that
can be accessed immediately
✔✔What are Accounts receivable? - ✔✔The amount owed to an organization from the
sale of its products or services
✔✔What are Fixed assets? - ✔✔The value of assets and property that cannot easily be
converted to cash and has a useful life of greater than 1 year
Includes Property, Plant, & Equipment (PP&E)
✔✔What are Accounts Payable? - ✔✔The amount owed to an organization's vendors
✔✔What is Debt? - ✔✔The amount of obligations owed to creditors
✔✔What is Equity? - ✔✔Cummalative shareholder investment + Cumulative net income
✔✔What is Working Capital?
Where is WC typically derived from? - ✔✔Typically deriving from the balance sheet, this
is a measure of a company's effciency and its short term financial health
Calculated as Non cash current assets - Non debt current liabilites
✔✔What are Non-cash current assets? - ✔✔All assets besides cash that are expected
to be converted into cash within one year
✔✔What are Non-Debt current liabilities? - ✔✔Obligations besides short term debt that
are due within one year
Current liabilites appear on the balance sheet and include accounts payable, accrued
liabilites, and other obligations
, ✔✔Explain the differences and payoffs between Debt and Equity - ✔✔Debt is less
expensive as its less risky, Debt owners typically have priority claims on a comapany's
assets if they go bankrupt
Equity is more expensive as as holders are not guaranteed their investment back if the
company goes backrupt
Investors require a lower/higher rate of return to mitigate their risk
✔✔What is Net Debt? - ✔✔Not on the balance sheet, it is derived from the balance
sheet
Calculated as Total Debt - Cash
Assumes that if cash were used to pay down debt, net debt would be the resulting
amount
Typically used in credit analysis
✔✔What is the Cash flow statement? - ✔✔Shows how much cash is generated or lost
during a period of time
✔✔What is the purpose of the Cash flow statement? - ✔✔Reconciles net income to
change in cash
Breaks down cash into operating, investing, and financing activities
Reflects a company's liquidity
✔✔What does the Cash flow statement contain? - ✔✔Cash from operating activities,
Cash fro investing activities, cash from financing activities, beginning cash balance,
change in cash, ending cash balance
✔✔What is Cash from operating activities? - ✔✔The amount of cash generated by an
organization's normal business operations
✔✔What does Cash from operating activities typically include? - ✔✔Net earnings,
Depreciation, Amortization, Change in working capital accounts
✔✔What is Cash from Investing activities? - ✔✔Cash flow related to the acquisition and
dispoal of an organization's long term investments including PP&E, and M&A
✔✔What is Cash from Financing Acitivites? - ✔✔Cash flow between an organization
and its owners and creditors
QUESTIONS AND ANSWERS GRADED A+
✔✔What is the Balance sheet? - ✔✔Shows an organizations financial position at a
particular point in time
✔✔What equation is the Balance sheet centered around? - ✔✔Assets = Liabilities +
Equity
✔✔What does the Balance sheet have on it? - ✔✔Cash, Accounts receivable, fixed
assets, accounts payable, debt, equity
✔✔What is cash? - ✔✔Current assets comprising currency or currency equivalents that
can be accessed immediately
✔✔What are Accounts receivable? - ✔✔The amount owed to an organization from the
sale of its products or services
✔✔What are Fixed assets? - ✔✔The value of assets and property that cannot easily be
converted to cash and has a useful life of greater than 1 year
Includes Property, Plant, & Equipment (PP&E)
✔✔What are Accounts Payable? - ✔✔The amount owed to an organization's vendors
✔✔What is Debt? - ✔✔The amount of obligations owed to creditors
✔✔What is Equity? - ✔✔Cummalative shareholder investment + Cumulative net income
✔✔What is Working Capital?
Where is WC typically derived from? - ✔✔Typically deriving from the balance sheet, this
is a measure of a company's effciency and its short term financial health
Calculated as Non cash current assets - Non debt current liabilites
✔✔What are Non-cash current assets? - ✔✔All assets besides cash that are expected
to be converted into cash within one year
✔✔What are Non-Debt current liabilities? - ✔✔Obligations besides short term debt that
are due within one year
Current liabilites appear on the balance sheet and include accounts payable, accrued
liabilites, and other obligations
, ✔✔Explain the differences and payoffs between Debt and Equity - ✔✔Debt is less
expensive as its less risky, Debt owners typically have priority claims on a comapany's
assets if they go bankrupt
Equity is more expensive as as holders are not guaranteed their investment back if the
company goes backrupt
Investors require a lower/higher rate of return to mitigate their risk
✔✔What is Net Debt? - ✔✔Not on the balance sheet, it is derived from the balance
sheet
Calculated as Total Debt - Cash
Assumes that if cash were used to pay down debt, net debt would be the resulting
amount
Typically used in credit analysis
✔✔What is the Cash flow statement? - ✔✔Shows how much cash is generated or lost
during a period of time
✔✔What is the purpose of the Cash flow statement? - ✔✔Reconciles net income to
change in cash
Breaks down cash into operating, investing, and financing activities
Reflects a company's liquidity
✔✔What does the Cash flow statement contain? - ✔✔Cash from operating activities,
Cash fro investing activities, cash from financing activities, beginning cash balance,
change in cash, ending cash balance
✔✔What is Cash from operating activities? - ✔✔The amount of cash generated by an
organization's normal business operations
✔✔What does Cash from operating activities typically include? - ✔✔Net earnings,
Depreciation, Amortization, Change in working capital accounts
✔✔What is Cash from Investing activities? - ✔✔Cash flow related to the acquisition and
dispoal of an organization's long term investments including PP&E, and M&A
✔✔What is Cash from Financing Acitivites? - ✔✔Cash flow between an organization
and its owners and creditors
