This quiz works best with JavaScript enabled. Home > Finance > Financial Analysis > Financial Modeling > Financial Modeling – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Financial Modeling Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The percent of sales method assumes that as sales grow, many income statements and balance sheet items will grow proportional to sales. A) True. B) False. Show Answer Correct Answer: A) True. 2. What is the difference between a One-Dimensional Data Table and a Two-Dimensional Data Table? A) One-Dimensional and Two-Dimensional are different in the number of formulas and parameters they can handle. B) One-Dimensional performs sensitivity analysis by varying one formula using one parameter while Two-Dimensional does the same by changing two parameters. C) One-Dimensional performs sensitivity analysis by varying one formula using one parameter while Two-Dimensional varies two formula by changing two parameters. D) One-Dimensional and Two-Dimensional are the same with a difference in the number of formulas they can handle. Show Answer Correct Answer: B) One-Dimensional performs sensitivity analysis by varying one formula using one parameter while Two-Dimensional does the same by changing two parameters. 3. When an invoice is paid to an organization by a customer what is the balance sheet outcome? A) Revenue is increased and accounts receivable is reduced. B) Revenue is increased and accounts receivable is increased. C) Accounts receivable is increased and cash is reduced. D) Accounts receivable is reduced and cash is increased. Show Answer Correct Answer: D) Accounts receivable is reduced and cash is increased. 4. A ..... is a plan specifying how money will be used or spent during a particular period. A) Budget. B) Financial forecast. C) Financial plan. D) Accounting equation. Show Answer Correct Answer: A) Budget. 5. Which of the following presents the results of operations over a period of time? A) Equity Schedule. B) Working Capital Schedule. C) Balance sheet. D) Cash flow statement. E) Income Statement. Show Answer Correct Answer: E) Income Statement. 6. Investment can be defined. A) Person's dedication to purchasing a house or flat. B) Use of capital on assets to receive returns. C) Usage of money on a production process of products and services. D) Net additions made to the nation's capital stocks. Show Answer Correct Answer: B) Use of capital on assets to receive returns. 7. Which of the following is not a core building block of a robust financial model? A) Interpretation. B) Processing. C) Inputs. D) Outputs. Show Answer Correct Answer: A) Interpretation. 8. A Margin Typically shows a line item as a percentage of: A) Enterprise Value. B) Cash. C) Revenue. D) Gross Profit. E) Net Income. Show Answer Correct Answer: C) Revenue. 9. The ..... is a financial report that shows incoming and outgoing money during an accounting period (often a month, quarter, or year). A) Income statement. B) Financial plan. C) Financial forecast. D) Statement of cash flows. Show Answer Correct Answer: D) Statement of cash flows. 10. The Gross margin reflects the operational profitability of the business A) TRUE. B) Falso. Show Answer Correct Answer: B) Falso. 11. Financial Management refers to the planning, monitoring, organising & controlling of the monetary resources of a business. A) True. B) False. Show Answer Correct Answer: A) True. 12. The idea of a budget is to spend exactly as much as you spend. A) False. B) True. Show Answer Correct Answer: A) False. 13. What is the retention ratio for Firm ABC if the firm's return on equity (ROE) is 12% and the firm's dividend payout ratio is 45%? A) 45%. B) 55%. C) 6.6%. D) 5.4%. Show Answer Correct Answer: B) 55%. 14. Which one of the following will increase the NPV of a project? A) A decrease in the discount rate. B) Increasing the amount of the initial cash outflow. C) An increase in the discount rate. D) Decreasing the amount of each cash inflow. Show Answer Correct Answer: A) A decrease in the discount rate. 15. Which financial institution usually has the highest interest rates on loans? A) Credit unions. B) Payday loans. C) Commercial banks. D) None of above. Show Answer Correct Answer: B) Payday loans. 16. High leverage is negative for the company when the market grows A) Falso. B) TRUE. Show Answer Correct Answer: A) Falso. 17. Under which of the following circumstances a company is NOT likely to declare a higher dividend? A) When the earnings of the company are high. B) When a company has a lucrative forthcoming business opportunity(Growth opportunity ). C) When the cash flow position of the company is strong. D) None of the above. Show Answer Correct Answer: B) When a company has a lucrative forthcoming business opportunity(Growth opportunity ). 18. The systematic process of recording and reporting the financial position of a person or an organization is called, ..... A) Accounts receivable. B) Accounting. C) Generally accepted accounting principals (GAAP). D) Fixed assets. Show Answer Correct Answer: B) Accounting. 19. How is Ebitida typically calculated? A) Gross profit plus depreciation and amortization. B) Cash flow from operations less capital expenditures. C) Operating income plus depreciation and amaortization. D) Cash flow from operations plus depreciation and amortization. E) Net income less taxes. Show Answer Correct Answer: C) Operating income plus depreciation and amaortization. 20. How is the number of shares repurchased typically calculated in a financial model? A) Shares outstanding x change in free cash flow. B) Share repurchases / average price paid per share. C) Share repurchases x average price paid per share. D) Shares outstanding x dividend growth rate. Show Answer Correct Answer: B) Share repurchases / average price paid per share. 21. INTERNAL GROWTH RATE is the maximum growth rate a firm can achieve without resorting to external financing. A) False. B) True. Show Answer Correct Answer: B) True. 22. Which of the following statements is/are correct? A) The appropriate tax rate to use in the adjustment of the before-tax cost ofdebt to determine the after-tax cost of debt is the average tax rate becauseinterest is deductible against the company's entire taxable income. B) For a given company, the after-tax cost of debt is generally less than boththe cost of preferred equity and the cost of common equity. C) For a given company, the investment opportunity schedule is upward slop-ing because as a company invests more in capital projects, the returns frominvesting increase. D) All of the above. Show Answer Correct Answer: B) For a given company, the after-tax cost of debt is generally less than boththe cost of preferred equity and the cost of common equity. 23. ....= total assets/common equity A) Turnover multiplier. B) Stock multiplier. C) Graphical multiplier. D) Equity multiplier. Show Answer Correct Answer: D) Equity multiplier. 24. What's a Data Table? A) Data table commands are powerful commands that help us to create tables in Excel. B) Data table commands are powerful commands that help us to create charts in Excel. C) Data table commands are powerful commands that make it possible to do complex sensitivity analyses. D) All of the above. Show Answer Correct Answer: C) Data table commands are powerful commands that make it possible to do complex sensitivity analyses. 25. An independent project should be accepted if it A) Produces a net present value that is greater than the equivalent IRR. B) Produces a net present value that is greater than or equal to zero. C) Has only one sign reversal. D) Produces a profitability index greater than or equal to zero. Show Answer Correct Answer: B) Produces a net present value that is greater than or equal to zero. 26. If the NPV of project A is +$ 80, and that of project B is-$ 40, and that of project C is +$ 20, what is the NPV of the combined project? A) $ 60. B) $ 100. C) $ 20. D) -$ 40. Show Answer Correct Answer: A) $ 60. 27. Which of the following options represents a use (outflow) of cash? A) Raising equity capital. B) Delaying payments to suppliers. C) Customers paying off invoices. D) Purchasing inventory. Show Answer Correct Answer: D) Purchasing inventory. 28. All else being equal, depreciation increases by $ 100. Assuming corporate taxes are 40%, which of the following is a false statement? A) PP&E would be reduced by $ 100. B) Cash would increase by $ 40. C) Shareholder's equity would be reduced by $ 60. D) Cash flow from operations would be reduced by $ 100. E) Net income would be reduced by $ 60. Show Answer Correct Answer: D) Cash flow from operations would be reduced by $ 100. 29. Dividend decision is concerned with A) Only distribution of dividend to shareholders. B) How much to be retained in business. C) How much profit earned is distributed to shareholders and how much to be retained in the business. D) None of the above. Show Answer Correct Answer: C) How much profit earned is distributed to shareholders and how much to be retained in the business. 30. When structuring a financial model in Excel, it is ideal that A) Processing is as detailed and complicated as possible. B) Inputs are entered more than once whenever needed. C) Outputs are kept at the very end of the model so they are not quickly accessible. D) Processing is broken down into simple steps. Show Answer Correct Answer: D) Processing is broken down into simple steps. ← PreviousNext →Related QuizzesFinancial Analysis QuizzesFinance QuizzesFinancial Modeling Quiz 1Financial Modeling Quiz 2Financial Modeling Quiz 3Financial Modeling Quiz 5 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books