Do you know that? 93% are happier since started freelancing next

Contact Email: teammmrem@yahoo.com

<< All Upwork (oDesk) and Elance Tests << Elance test answers << Fin. & Mgt. category

Test answers for Financial Forecasting 2016

(72) Last updated: January 23
Elance • Fin. & Mgt.
Questions and answers are regularly updated. Answered and not answered tests questions.

This helps getting job: Hundreds of (cover letter examples , interview questions , profile samples ) • Earn on Upwork (oDesk)
Job assistance: jobs popularityfreelance rates

Popular test answers: HTML, .Net, CSS, English, SEO, Photoshop, iOS, Java, Android, Ruby, Python, JavaScript

See all 6 tests answers updated

Find Upwork (oDesk) and Elance test answers on this website:



Collapse | Expand

72 Answered Test Questions:

1. True or False? Probability models are often used for financial forecasts.

Answers:

• True

• False

2. Which of the following items is NOT likely found on a capital budget?

Answers:

• Research and Development

• Replacement Equipment

• Exisiting Inventory

• New Equipment

3. Which of the following is NOT a forecasted financial statement?

Answers:

• Pro forma Statement of Cash Flows

• Pro forma Statement of Financing

• Pro forma Balance Sheet

• Pro forma Income Statement

4. What is the discount rate often used in capital budgeting that makes the Net Present Value (NVP) of all cash flows from a particular project equal to zero:

Answers:

• Turnover Rate

• Internal Rate of Return (IRR)

• Price to Earnings (P/E)

• Rate of Asset Return (RAR)

5. True or False? Verification is the process of comparing actual results and predicted results.

Answers:

• True

• False

6. Management will use sensitivity analysis during financial forecasting to:

Answers:

• Analyze foreign economic conditions to determine currency risk.

• Analyze how previous financial forecasts performed versus actual company performance.

• Determine the type of forecasting method to use.

• Determine how different values of an independent variable will impact a particular dependent variable under a set of stated assumptions.

7. A cash forecast is an estimate of future inflows of revenue and _______?

Answers:

• outflows of profits

• outflows of expenses

• inflows of expenses

8. Which of the following items would NOT be included in a cash budget?

Answers:

• Cash receipts

• Taxes

• Payments to Suppliers

• Depreciation

9. Which of the following helps create a financial model?

Answers:

• (All of these)

• expected tax rate

• growth rate

• gross margin

10. True or False? A foward price-earning ratio is an example of financial forecasting.

Answers:

• False

• True

11. What does DCF stand for?

Answers:

• Discount Cash Flow

• Discounted Cash Flow

• Discount Cash Financial

• Discounted Cash Financials

12. True or False? Use of historical data is irrelevant to a financial forcast.

Answers:

• False

• True

13. True or False? Dividend structure and Capital structure are crucial to financial models

Answers:

• False

• True

14. True or False? The Monte Carlo method is often used in modeling.

Answers:

• True

• False

15. True or False? Predicting revenue is not part of financial forecasting.

Answers:

• True

• False

16. Projected financial statements are called:

Answers:

• SEC 10K Filings

• Annual Reports

• Cash Budgets

• Pro Forma Financial Statements

17. Company XYZ has a project that requires an immediate investment of $100,000 which management has calculated to have discounted cash inflows of $105,000. This project is:

Answers:

• Acceptable, because it has a positive Net Present Value (NPV).

• Acceptable, because the Net Present Value (NPV) is equal to the required rate of return.

• Not acceptable, because the Internal Rate of Return (IRR) is negative.

• Not acceptable, because it has a negative Profitability Index.

18. True or False? Present value is the future amount of money that is discounted to today.

Answers:

• False

• True

19. True of False? Forecasting future revenues is one of the most difficult aspects when preparing a financial forecast.

Answers:

• False

• True

20. True or False? A sensitivity analysis is changing a value or an original assumption to see what effect it has on the overall model.

Answers:

• False

• True

21. True or False? Forecasting is based on historical information and assumptions.

Answers:

• False

• True

22. What is financial forecasting?

Answers:

• Determination of a company's current financial situation

• (None of these)

• Estimation of a company's future financial situation

23. True of False? Forecasting future costs can be estimated by using historical data.

Answers:

• False

• True

24. The primary purpose of a cash budget is:

Answers:

• To determine monthly cash receipts

• To determine whether the company has enough cash to fulfill regular operations or will generate excess cash

• To determine the cash collection pattern

• To divide the income statement into monthly periods

25. Which of the following could be used in financial forecasts?

Answers:

• (All of these)

• Information on balance sheets

• financial models

• Historical data of earnings

26. What does EPS stand for?

Answers:

• Earnings Per Share

• (None of these)

• Earnings Per Sector

• Estimated Pre Sales

27. Financial forecasting is used for:

Answers:

• (All of these)

• countries

• public companies

• private companies

28. True of False? The longer the financial forecast, the more accurate it will be.

Answers:

• False

• True

29. True or False? A Monte Carlo distribution could be a bell curve.

Answers:

• False

• True

30. What does EBIT stand for?

Answers:

• Earnings before Interest and Tax

• Earnings before Income and Tax

• Earnings before Interest and Taxable Income

31. True or False? Financial forecasting can always predict future events.

Answers:

• True

• False

32. A security that has a beta of less than 1 has __________?

Answers:

• lower volatility than the market

• higher volatility than the market

33. Which of the following balance sheet items is NOT likely to vary directly with changes in revenue?

Answers:

• Inventory

• Accounts Payable

• Accounts Receivable

• Long-term Debt

34. Which type of security is used as a measurement of a low risk rate?

Answers:

• (none of these)

• corporate bonds

• government bonds

• LIBOR

35. True or False? Bayes theorem is often used in financial forecasting.

Answers:

• True

• False

36. What is the formula for compound interest?

Answers:

• (1+it) / (t)

• (1+i)^t

• (1+i) / (t)

• (1+ it)

37. True or False? The Bayesian Probablity method is used often for financial forecasting.

Answers:

• False

• True

38. What are the two overarching financial forecasting approaches?

Answers:

• Exponential and Qualitative

• Qualitative and Quantitative

• Rate Conversation and Sales Smoothing

• Average and Exponential

39. Which of the following capital budgeting techniques calculates the length of time required to recover the initial investment for a project?

Answers:

• Payback Method

• Simple Rate of Return Method

• Discounted Cash Flow Method

• Internal Rate of Return Method

40. Which equation is best for forecasting future sales?

Answers:

• Forecasted Sales = Current Sales(1 - Growth Rate)

• Forecasted Sales = Current Sales(1 + Growth Rate)^2

• Forecasted Sales = Current Sales + (1 + Growth Rate)

• Forecasted Sales = Current Sales(1 + Growth Rate)

41. A company’s Sustainable Rate of Growth (SRG) is determined by which of the following:

Answers:

• SRG = Net Income/Common Equity

• SRG = Common Equity/Assets

• SRG = ROE*(1 - Dividend Payout Ratio)

• SRG = Sales/Assets

42. Which of the following pro forma statements is likely to be calculated first while forecasting financials?

Answers:

• Income Statement

• Statement of Cash Flow

• Statement of Retained Earnings

• Balance Sheet

43. True or False? The problem with Monte Carlo analysis is that you can only run one trial.

Answers:

• False

• True

44. Which Method uses historical data as the basis of estimating future outcomes/information

Answers:

• Time Series

• Econometric Forecasting Methods

• Artificial Intelligence Methods

• Judgmental Methods

45. Which of the following is an example of financial forecasting?

Answers:

• Forward PE ratio

• Tailing PE ratio

• Market capitalization

• PE ratio

46. What is an example of qualitative forecasting technique?

Answers:

• Simple Exponential Smoothing

• Last Period Demand

• Seasonal Indexes

• Delphi Method

47. The time series method:

Answers:

• most commonly used

• (All of these)

• takes into account several methods using past and current data

• gives less importance to extreme data points

48. The indicator approach takes into account:

Answers:

• (None of these)

• (All of these)

• GDP

• unemployment figures

49. The Delphi method is a type of:

Answers:

• (None of these)

• linear model

• qualitative model

• quantitative model

50. Which of the following is not included under the quantitative forecasting method?

Answers:

• Naive Method

• Trend Analysis

• Delphi Method

• Moving Average

51. True or False? Black swan events are typically included in financial forecasts.

Answers:

• False

• True

52. Which of the following is not included under the qualitative forecasting method?

Answers:

• Delphi Method

• Market Research

• Moving Average Methods

• Executive Opinions

53. If a company has a low PE ratio and is expected to maintain profit, what do you expect the share price to do in the future?

Answers:

• stay the same

• Go up

• Go down

54. The most encompassing means of financial forecasting is:

Answers:

• Done using a short-term time horizon

• Through the use of Pro Forma Financial Statements

• Done using a long-term time horizon

• Through the use of securities analyst's forecasts for the firm

55. Which budget is prepared to determine how much external financing will be needed to support estimated sales?

Answers:

• Income Statement Budget

• Cash Budget

• Shareholder's Equity Budget

• Balance Sheet Budget

56. True or False? Quantitative models typically use experts opinions to form future trends.

Answers:

• False

• True

57. The indicator approach is a type of:

Answers:

• qualitative model

• (None of these)

• linear model

• quantitative model

58. On the pro forma balance sheet, which of the following is normally the "plug" number inserted to "balance" the balance sheet?

Answers:

• Long-term Debt

• Total Assets

• Additional Funds Needed

• Changes in Retained Earnings

59. True or False? A black swan is an example of an internality.

Answers:

• False

• True

60. Companies with lower PEG ratios typically:

Answers:

• outperfom companies with higher PEG ratios

• (None of these)

• underperform companies with higher PEG ratios

• there is no correlation between PEG and performance

61. Companies with higher PEG ratios typically:

Answers:

• have no correlation with companies who have lower PEG ratios

• (None of these)

• underperform companies with lower PEG ratios

• outperfom companies with lower PEG ratios

62. What does the x-axis of the security market line measure?

Answers:

• slope

• risk

• expected return

63. If the yield to maturity > current yield > coupon yield, the bond is sold at a ______?

Answers:

• discount

• premium

• par

64. If a company has a very high forward PE ratio, what do you expect the share price to do in the future?

Answers:

• stay the same

• Go down

• Go up

65. What is an advantage of the EV / EBITDA multiple?

Answers:

• It is unaffected by depreciation policy

• It reports variations in capital expenditures and depreciation

• Ignores value created through tax management

66. How does market research differ from the delphi method?

Answers:

• (None of these)

• both are similar but the delphi method is a newer name

• both take the opinions of experts but the delphi method takes into account their previous forecasting results

• one takes the opinion of non-experts while the other takes only the opinion of experts

67. True or False? Bayes theorem does not use balance sheets to make predictions.

Answers:

• False

• True

68. The Black-Scholes model calculates the price of a:

Answers:

• European put and call options

• Bond Price

• Share Price

• American put and call option

69. Which of the following are important characteristics when identifying peer companies to use in firm valuation?

Answers:

• Cash Flow

• All

• Growth Rate

• Company Size

70. The Percent of Sales Method of financial forecasting will help to identify:

Answers:

• Relationship changes between assets and liabilities

• The rationale behind sales increases

• Changes to earnings

• Financing needs

71. Before they are updated, financial forecasts are typically used for:

Answers:

• a month's time

• a year's time

• 5 year's time

• (None of these)

72. True or False? Prediction markets are informative markets that are created for the purpose of making market predictions.

Answers:

• False

• True