Free CFM Financial Statement Modeling Questions and Answers

Question 1

Which financial statement typically serves as the starting point for a financial model?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Cash Flow Statement

Answer

Statement of Changes in Equity

Question 2

Which of the following is a typical assumption made when projecting a financial model?

Accepted Answer

Revenue growth rate

Answer

Historical stock prices

Answer

Previous year's tax return

Answer

Dividend reinvestment plans

Question 3

In a three-statement financial model, which statement is typically built first?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Cash Flow Statement

Answer

Statement of Retained Earnings

Question 4

Which financial statement shows a company’s liquidity position at a specific point in time?

Accepted Answer

Balance Sheet

Answer

Income Statement

Answer

Cash Flow Statement

Answer

Statement of Comprehensive Income

Question 5

Which section of the cash flow statement adjusts net income for non-cash items?

Accepted Answer

Operating Activities

Answer

Investing Activities

Answer

Financing Activities

Answer

Equity Section

Question 6

What is typically the final line item in an income statement?

Accepted Answer

Net Income

Answer

Gross Profit

Answer

Operating Income

Answer

Earnings Before Tax (EBT)

Question 7

Which formula correctly calculates Free Cash Flow (FCF)?

Accepted Answer

Net Income + Depreciation + Changes in Working Capital - CapEx

Answer

Revenue - Cost of Goods Sold

Answer

Assets - Liabilities

Answer

Net Income + CapEx

Question 8

Why is it important to link the three financial statements in a model?

Accepted Answer

To ensure consistency across statements

Answer

To track stock price changes

Answer

To calculate historical earnings

Answer

To identify past management decisions

Question 9

Which of the following would most likely be considered a non-cash expense in a financial model?

Accepted Answer

Depreciation

Answer

Interest Expense

Answer

Salary Payments

Answer

Tax Payments