Financial Forecasting MCQ Questions Answers

1. Which would most likely be included on a summary page for Income Statement data?

2. Which decision could be made by examining the Balance Sheet?

3. Which would one expect to be the highest expense?

4. Another name for the Balance Sheet is ____________________.

5.

Valuation is a ______________________.

6. Why would a company be conservative when projecting revenues?

7. Valuation will typically trend _______________.

8. Valuation can be calculated by ____________________.

9. A company has a pre-money valuation of $1,000,000. An investor will invest $100,000. The post-money valuation is _________________.

10. How is Cash at the beginning of the period determined?

11. In a variance/sensitivity analysis, a company will typically calculate _________________.

12. Which would be a logical arrangement for showing revenue?

13. Retained Earnings reflect ____________________.

14. Which would most likely NOT be included on summary financials?

15. Which is the accepted format for a forecasted Cash Flow Statement?

16. The basic formula for a Balance Sheet is __________________.

17. Companies calculate their valuation for the purpose of _____________________.

18. Naming assumption cells is helpful because ____________________.

19. What purpose does a central assumptions input tab serve in an Excel-based forecast?

20. Overall, what is the purpose of a Cash Flow Statement?

21. For most new ventures in the process of creating a forecast, the expense that warrants the most detailed analysis and input is _____________.

22. A normal revenue model will _______________.

23. Would it be better to create detailed input that individually forecasts expenses or to create a simple, one-line input for Operating Expenses?

24. Purpose of a summary page?

25. Which is the accepted format for a forecasted P&L?

26. A simple method of calculating variance is to _________________.

27. The term 'revenue driver' refers to ____________________.

28. In which section would a startup company record an investment by a venture capital firm?

29. Why would an investor be interested in a company's pre-money valuation?

30. In general, a financial plan can be defined as _____________________.

31. The majority ownership of a private company is typically held by __________________.

32. Ad Revenue, which is revenue generated by placing advertisements of other companies on your site, can be modeled by _________________.

33. To be as specific as possible, a revenue forecast should ______________.

34. Which decision would best be made by looking at cash flow?

35. The most logical formatting convention for assumptions would be ___________________.

36. Why is it important to create assumptions for all possible changing variables?

37. Which of the following would be the most useful forecasting interval?

38. Which is the accepted format for a forecasted Balance Sheet?

39. Which decision could be made by looking at the Balance Sheet?

40. In which section would Change in Accounts Receivable be recorded?

41. Another way to express the Balance Sheet formula is ________________.

42. In what way are the Income Statement and the Balance Sheet linked in a dynamic forecast?

43. Capitalization is defined as ______________________.

44. The term 'burn rate' refers to ______________.

45. In which way would typical Rent Expense be modeled?

46. How is income tax forecasted?

47. The Cash Flow Statement and the Balance Sheet linked in a dynamic forecast?

48. Operating expenses should ____________________.

49. Which would most likely be included on a summary page for Balance Sheet data?

50. Should a summary include metrics such as Gross Margin %?

51. The purpose of a worst case analysis is to _____________________.

52. One method of calculating the valuation of a company is ________________.

53. Net Income on the Balance Sheet reflects _______________.

54. A capitalization summary would show ______________________.

55. To calculate a worst case scenario, a company would ____________ and ____________.

56. Why is Change in Accounts Payable added back to Net Income?

57. The Net Income on the Cash Flow Forecast comes from the __________________.

58. What does an increasing trend in Accounts Payable indicate for a company?

59. Which party should be kept in mind when creating a financial forecast?

60. Which would NOT be included on a summary page?

61. Is income tax forecasted?

62. Revenues on the Profit & Loss should be changed ___________________.

63. For a startup company looking to gain investor interest, which seems like a reasonable amount of time to forecast ahead?

64. Which represent three possible revenue streams for an online venture?

65. Why is it reasonable for a startup company to forecast a Net Loss for several years?

66. Why might someone forecast future years as one annual number?

67. For which company structure is it easiest to issue shares?

68. Depreciation on the Balance Sheet reflects ___________________.

69. Why would a company perform a variance/sensitivity analysis?

70. An operating budget in a corporate setting is usually prepared ________________.

71. Which is NOT an operating expense?

72. The primary financial statements that are forecast are _________________.

73. Why does a Balance Sheet balance (assets = liabilities + equity)?

74. A company has a post-money valuation of $500,000. The last investor put in $100,000. The pre-money valuation before the investor came in was _________________.

75. Before they are updated, financial forecasts are typically used for:

76. True or False? Prediction markets are informative markets that are created for the purpose of making market predictions.

77. The Percent of Sales Method of financial forecasting will help to identify:

78. Which of the following are important characteristics when identifying peer companies to use in firm valuation?

79. The Black-Scholes model calculates the price of a:

80. True or False? Bayes theorem does not use balance sheets to make predictions.

81. How does market research differ from the delphi method?

82. What is an advantage of the EV / EBITDA multiple?

83. Companies with higher PEG ratios typically:

84. If a company has a very high forward PE ratio, what do you expect the share price to do in the future?

85. If the yield to maturity > current yield > coupon yield, the bond is sold at a ______?

86. On the pro forma balance sheet, which of the following is normally the "plug" number inserted to "balance" the balance sheet?

87. Companies with lower PEG ratios typically:

88. What does the x-axis of the security market line measure?

89. True or False? A black swan is an example of an internality.

90. The indicator approach is a type of:

91. If a company has a low PE ratio and is expected to maintain profit, what do you expect the share price to do in the future?

92. The most encompassing means of financial forecasting is:

93. Which budget is prepared to determine how much external financing will be needed to support estimated sales?

94. True or False? Quantitative models typically use experts opinions to form future trends.

95. Which of the following is not included under the qualitative forecasting method?

96. Which of the following is not included under the quantitative forecasting method?

97. The Delphi method is a type of:

98. What is an example of qualitative forecasting technique?

99. Which of the following items is NOT likely found on a capital budget?

100. True or False? Black swan events are typically included in financial forecasts.