Financial Forecasting Test

Financial Forecasting Test


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

a. Balance Sheet
b. Statement of Retained Earnings
c. Forecasted Profit & Loss Statement
d. Variance Analysis

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

a. It indicates nothing in particular.
b. The company is making better use of its cash and is not paying bills as quickly.
c. Cash is being mismanaged.
d. Net Income is increasing.

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

a. increase revenue streams, decrease operating expenses
b. increase operating expenses, increase revenues
c. decrease revenues, increase operating expenses
d. show no change to revenue, show change only to operating expenses

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

a. There is no reason to do so.
b. An increase in AP reflects the fact that the company did not spend cash on paying its bills.
c. It is required by the SEC.
d. It is required by IRS tax law.

In what way are the Income Statement and the Cash Flow Statement linked in a dynamic forecast?

a. Change in Accounts Receivable is carried forward to the Cash Flow Statement.
b. Depreciation Expense is carried forward to the Cash Flow Statement.
c. Net Income is carried over to the first line of the Cash Flow Statement.
d. Rent expense is used on the Cash Flow Statement.

A capitalization summary would show ______________________.

a. Net Income, Cash, and Retained Earnings
b. Operating Expenses and Tax Liability
c. Change in Accounts Receivable
d. Valuation, Investment, and Ownership %

What is meant by the term “post-money valuation”?

a. The valuation of a company before collecting accounts receivable
b. The valuation of a company after collecting all accounts receivable
c. The valuation of a company after an investment round
d. The valuation of a company before an investment round

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

a. Accounts Payable change
b. Discounted Cash Flows
c. Retained Earnings Growth
d. Tax Liability discounted

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