Basics of Financial Modelling

A financial analyst wants to sensitize the gross profit of a company using two major inputs: gross margin (horizontal inputs) and sales growth percentage (vertical inputs). Given the screenshot below, what values should be entered for the row input cell and column input cell to generate the data table?*

• Row input cell: B11; column input cell: A12

• Row input cell: A12; column input cell: B11

• Row input cell: B3; column input cell: B2

• Row input cell: B2; column input cell: B3

The best financial models should (choose the best option from below)

• Keep things as simple as possible while provides sufficient detail for decision making

• Offer users a high degree of detail and precision

• Be easy to follow and audit

• Be very simple and have the minimum level of detail

When structuring a financial model in Excel, it is ideal that

• Processing is as detailed and complicated as possible

• Inputs are entered more than once whenever needed

• Outputs are kept at the very end of the model so they are not quickly accessible

• Processing is broken down into simple steps

Which of the following is not a core building block of a robust financial model?

• Inputs

• Interpretation

• Processing

• Outputs

EBITDA stands for:

• Earnings Behalf of Interest, Taxes, Depreciation

  and Amortization

• Earnings Before Interest, Taxes, Depreciation and Amortization

• Earnings Before Income Taxes, Depreciation and Amortization

• Earnings

  Between Interest, Taxes, Depreciation and Amortization

Which cash flow is accessible for a firm’s investors?

• Free cash flow

• Investing cash

• Intrinsic stock

• Extrinsic stock

Which of the following is not a financial modelling schedule?

• Working capital

• Suspense account

• Balance sheet

• Cash flow statement

The percent of sales method assumes that as sales grow, many income statements and balance sheet items will grow proportional to sales.

• True

• False

If the liability and equity are greater than the assets (L + E > A) after forecasting the balance sheet, the excess cash available can be used to:

I. Retire debt

II. Repurchase shares

III. Build extra cash reserves

IV. Distribute excess as dividends

• I and II

• I, II and III

• II, III and IV

• All of the above

INTERNAL GROWTH RATE is the maximum growth rate a firm can achieve without resorting to external financing.

• True

• False