OPERATIONAL MODELING FINAL EXAM WITH ANSWERS
#9 (CFI FMVA)
What are financial modeling guidelines and why are they relevant? - correct answer A
set of principles and guidance for financial modeling which promote consistency across
models used by all stakeholders.
What does the observed level of operational efficiency indicate? - correct answer The
company should consider additional capital expenditure to increase the capacity of the
plant.
Is the pricing forecast realistic? - correct answer No. The degree of pricing power is not
realistic as increased competition has entered the market.
The only variable cost for your client's business is materials. Calculate the average
sales volume over the three-year historical period provided. - correct answer 2.5 million
units.
For 2022, your client is expecting a sales volume of 4.5 million units and an inflation rate
of 4.0%. Calculate the total variable costs in US dollars for 2022. - correct answer $29.0
million.
In terms of gross-profit, which of the following periods likely requires further
investigation or analysis? - correct answer Fiscal 2016: Margins appear to be lower than
expected.
Consider EBITDA as a percentage of Revenue. What is a possible reason for the
observed EBITDA-margin in fiscal 2015? - correct answer An increase in sales
commissions to boost sales volumes.
What is the cost of goods sold primarily driven by for a given period? - correct answer
Sales volume.
Why would an increase in the company's days in A/P produce cash for a business? -
correct answer The company is 'stretching its payables' and deferring a cash outflow.
Why would an increase in a businesses' days in inventory consume cash? - correct
answer The business is expending cash to build up its inventory levels.
What is the Q2 2022 quarterly revenue amount implied by the accounts receivable
balance and days in A/R? - correct answer $26.8 million.
What is the Q3 2021 quarterly COGS amount implied by the inventory? - correct answer
$12.1 million.
#9 (CFI FMVA)
What are financial modeling guidelines and why are they relevant? - correct answer A
set of principles and guidance for financial modeling which promote consistency across
models used by all stakeholders.
What does the observed level of operational efficiency indicate? - correct answer The
company should consider additional capital expenditure to increase the capacity of the
plant.
Is the pricing forecast realistic? - correct answer No. The degree of pricing power is not
realistic as increased competition has entered the market.
The only variable cost for your client's business is materials. Calculate the average
sales volume over the three-year historical period provided. - correct answer 2.5 million
units.
For 2022, your client is expecting a sales volume of 4.5 million units and an inflation rate
of 4.0%. Calculate the total variable costs in US dollars for 2022. - correct answer $29.0
million.
In terms of gross-profit, which of the following periods likely requires further
investigation or analysis? - correct answer Fiscal 2016: Margins appear to be lower than
expected.
Consider EBITDA as a percentage of Revenue. What is a possible reason for the
observed EBITDA-margin in fiscal 2015? - correct answer An increase in sales
commissions to boost sales volumes.
What is the cost of goods sold primarily driven by for a given period? - correct answer
Sales volume.
Why would an increase in the company's days in A/P produce cash for a business? -
correct answer The company is 'stretching its payables' and deferring a cash outflow.
Why would an increase in a businesses' days in inventory consume cash? - correct
answer The business is expending cash to build up its inventory levels.
What is the Q2 2022 quarterly revenue amount implied by the accounts receivable
balance and days in A/R? - correct answer $26.8 million.
What is the Q3 2021 quarterly COGS amount implied by the inventory? - correct answer
$12.1 million.
