CFI FMVA Final Exam | 100 Verified Questions and
Answers | Latest 2026/2027 – Financial Modeling &
Valuation (A+ Study Guide )
1. Financial Modeling - ANSWER ✓ The process of creating a structured representation of
a company’s financial performance to support decision-making and valuation.
2. Three-Statement Model - ANSWER ✓ A model that links the income statement, balance
sheet, and cash flow statement into one dynamic forecast.
3. Terminal Value - ANSWER ✓ The value of a business beyond the explicit forecast
period, often representing most of the company’s value in a DCF model.
4. Weighted Average Cost of Capital (WACC) - ANSWER ✓ The blended cost of equity and
debt that represents the overall required rate of return for investors.
5. Enterprise Value (EV) - ANSWER ✓ A company’s total value, equal to equity value plus
net debt, minority interest, and preferred shares, minus cash.
6. Equity Value - ANSWER ✓ The residual value attributable to shareholders after all
liabilities are settled; equals enterprise value minus net debt.
7. Comparable Company Analysis (Comps) - ANSWER ✓ A relative valuation method
using market multiples of similar public companies to estimate value.
8. Precedent Transaction Analysis - ANSWER ✓ A valuation approach based on prices paid
in historical M&A transactions involving similar companies.
9. Discounted Cash Flow (DCF) - ANSWER ✓ A valuation technique that estimates the
present value of future free cash flows using a discount rate.
10. Free Cash Flow to the Firm (FCFF) - ANSWER ✓ Cash flow available to all investors
(both debt and equity) after operating expenses and taxes, but before interest payments.
11. Free Cash Flow to Equity (FCFE) - ANSWER ✓ Cash flow available only to equity
holders after servicing all debt obligations.
12. Sensitivity Analysis - ANSWER ✓ A technique that measures how changes in key
assumptions affect model outputs such as valuation.
, 13. Depreciation Schedule - ANSWER ✓ A supporting schedule that calculates depreciation
expense and the carrying value of fixed assets over time.
14. Working Capital - ANSWER ✓ A measure of liquidity calculated as current assets minus
current liabilities.
15. Forecasting - ANSWER ✓ The process of projecting future financial statements based on
assumptions about growth, margins, and costs.
16. Assumptions Sheet - ANSWER ✓ A clearly organized section in a model containing all
input drivers and key parameters.
17. Dynamic Linking - ANSWER ✓ The practice of connecting cells through formulas so
that changes in assumptions automatically update outputs.
18. Plug - ANSWER ✓ A balancing figure (often cash or debt) used to ensure that the balance
sheet remains balanced.
19. Scenario Analysis - ANSWER ✓ A method of testing multiple possible future outcomes
(e.g., best, base, worst cases) within a model.
20. Model Audit - ANSWER ✓ A systematic review of a financial model to verify accuracy,
logic, and consistency.
21. Hardcoding - ANSWER ✓ Entering static numbers directly into cells instead of linking to
formulas or assumptions.
22. Circular Reference - ANSWER ✓ A condition where a formula refers back to its own
result, creating an iterative loop in the model.
23. Iterative Calculation - ANSWER ✓ An Excel feature used to resolve circular references
by repeatedly recalculating values until stable.
24. Model Error Check - ANSWER ✓ Built-in controls that verify totals, balancing, and key
relationships throughout a model.
25. Valuation Multiple - ANSWER ✓ A ratio (such as EV/EBITDA or P/E) used to compare
relative values of companies.
26. Enterprise Value to EBITDA (EV/EBITDA) - ANSWER ✓ A common multiple
comparing total firm value to earnings before interest, taxes, depreciation, and
amortization.
Answers | Latest 2026/2027 – Financial Modeling &
Valuation (A+ Study Guide )
1. Financial Modeling - ANSWER ✓ The process of creating a structured representation of
a company’s financial performance to support decision-making and valuation.
2. Three-Statement Model - ANSWER ✓ A model that links the income statement, balance
sheet, and cash flow statement into one dynamic forecast.
3. Terminal Value - ANSWER ✓ The value of a business beyond the explicit forecast
period, often representing most of the company’s value in a DCF model.
4. Weighted Average Cost of Capital (WACC) - ANSWER ✓ The blended cost of equity and
debt that represents the overall required rate of return for investors.
5. Enterprise Value (EV) - ANSWER ✓ A company’s total value, equal to equity value plus
net debt, minority interest, and preferred shares, minus cash.
6. Equity Value - ANSWER ✓ The residual value attributable to shareholders after all
liabilities are settled; equals enterprise value minus net debt.
7. Comparable Company Analysis (Comps) - ANSWER ✓ A relative valuation method
using market multiples of similar public companies to estimate value.
8. Precedent Transaction Analysis - ANSWER ✓ A valuation approach based on prices paid
in historical M&A transactions involving similar companies.
9. Discounted Cash Flow (DCF) - ANSWER ✓ A valuation technique that estimates the
present value of future free cash flows using a discount rate.
10. Free Cash Flow to the Firm (FCFF) - ANSWER ✓ Cash flow available to all investors
(both debt and equity) after operating expenses and taxes, but before interest payments.
11. Free Cash Flow to Equity (FCFE) - ANSWER ✓ Cash flow available only to equity
holders after servicing all debt obligations.
12. Sensitivity Analysis - ANSWER ✓ A technique that measures how changes in key
assumptions affect model outputs such as valuation.
, 13. Depreciation Schedule - ANSWER ✓ A supporting schedule that calculates depreciation
expense and the carrying value of fixed assets over time.
14. Working Capital - ANSWER ✓ A measure of liquidity calculated as current assets minus
current liabilities.
15. Forecasting - ANSWER ✓ The process of projecting future financial statements based on
assumptions about growth, margins, and costs.
16. Assumptions Sheet - ANSWER ✓ A clearly organized section in a model containing all
input drivers and key parameters.
17. Dynamic Linking - ANSWER ✓ The practice of connecting cells through formulas so
that changes in assumptions automatically update outputs.
18. Plug - ANSWER ✓ A balancing figure (often cash or debt) used to ensure that the balance
sheet remains balanced.
19. Scenario Analysis - ANSWER ✓ A method of testing multiple possible future outcomes
(e.g., best, base, worst cases) within a model.
20. Model Audit - ANSWER ✓ A systematic review of a financial model to verify accuracy,
logic, and consistency.
21. Hardcoding - ANSWER ✓ Entering static numbers directly into cells instead of linking to
formulas or assumptions.
22. Circular Reference - ANSWER ✓ A condition where a formula refers back to its own
result, creating an iterative loop in the model.
23. Iterative Calculation - ANSWER ✓ An Excel feature used to resolve circular references
by repeatedly recalculating values until stable.
24. Model Error Check - ANSWER ✓ Built-in controls that verify totals, balancing, and key
relationships throughout a model.
25. Valuation Multiple - ANSWER ✓ A ratio (such as EV/EBITDA or P/E) used to compare
relative values of companies.
26. Enterprise Value to EBITDA (EV/EBITDA) - ANSWER ✓ A common multiple
comparing total firm value to earnings before interest, taxes, depreciation, and
amortization.
