FIA Financial Data Analysis & Reporting 3

Question 1

A company's days sales outstanding (DSO) increased from 30 to 50 days year-over-year. What does this most likely indicate?

Accepted Answer

The company is collecting receivables more slowly

Answer

An increasing DSO means the company takes longer to collect cash from credit sales, which can signal credit quality issues or lenient collection practices.

Question 2

In regression analysis used for financial forecasting, what does R-squared measure?

Accepted Answer

The proportion of variance in the dependent variable explained by the independent variable(s)

Answer

R-squared (coefficient of determination) indicates how well the independent variables explain the variability of the dependent variable, ranging from 0 to 1.

Question 3

Which financial statement reconciles net income to cash flow from operations?

Accepted Answer

Statement of cash flows (indirect method)

Answer

The indirect method of the cash flow statement starts with net income and adjusts for non-cash items and working capital changes to arrive at operating cash flow.

Question 4

An analyst is comparing two datasets with very different scales. Which statistical measure is most useful for comparing their variability?

Accepted Answer

Coefficient of variation

Answer

The coefficient of variation (CV = standard deviation / mean) normalizes variability relative to the mean, enabling comparison across datasets with different scales.

Question 5

Which of the following is an example of off-balance-sheet financing that analysts must scrutinize?

Accepted Answer

Operating lease obligations under old GAAP

Answer

Under older GAAP (pre-ASC 842), operating leases were not recorded on the balance sheet, understating a company's true liabilities and leverage.

(FIA) Financial Information Associate Certification Practice Test

(FIA) Financial Information Associate Certification Practice Test

FIA Financial Data Analysis & Reporting 3