FA FA Financial Modeling & Valuation

Question 1

Which valuation method estimates a company's value by discounting its projected future free cash flows to the present?

Accepted Answer

Discounted Cash Flow (DCF)

Answer

Price-to-Earnings (P/E) ratio

Answer

Book value method

Answer

Liquidation value method

Question 2

In a three-statement financial model, which statements are linked together?

Accepted Answer

Income statement, balance sheet, and cash flow statement

Answer

Income statement, budget report, and tax return

Answer

Balance sheet, accounts receivable, and payroll

Answer

Cash flow statement, budget, and audit report

Question 3

What does EBITDA stand for in financial analysis?

Accepted Answer

Earnings Before Interest, Taxes, Depreciation, and Amortization

Answer

Equity Before Income Taxes, Dividends, and Adjustments

Answer

Estimated Base Income Tax, Depreciation, and Accruals

Answer

Earnings Before Inflation, Trade Debt, and Allocation

Question 4

Which financial modeling technique tests how changes in key assumptions affect the output of a model?

Accepted Answer

Sensitivity analysis

Answer

Regression analysis

Answer

Cohort analysis

Answer

Trend extrapolation

Question 5

In comparable company analysis (comps), which multiple is most commonly used to value capital-intensive businesses?

Accepted Answer

EV/EBITDA

Answer

Price-to-Book (P/B)

Answer

Price-to-Sales (P/S)

Answer

Dividend yield

Question 6

What is the terminal value in a DCF model used to estimate?

Accepted Answer

The value of all cash flows beyond the explicit forecast period

Answer

The scrap value of a company's assets at wind-down

Answer

The present value of the first year's cash flow

Answer

The total debt owed at the end of the projection period