Operational Modeling final Exam
Questions And Correct Answers.
What are financial modeling guidelines and why are they relevant? - 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? - Answer The company should
consider additional capital expenditure to increase the capacity of the plant.
Is the pricing forecast realistic? - 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. - 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. - Answer $29.0 million.
In terms of gross-profit, which of the following periods likely requires further investigation or analysis? -
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? - Answer An increase in sales commissions to boost sales volumes.
What is the cost of goods sold primarily driven by for a given period? - Answer Sales volume.
Why would an increase in the company's days in A/P produce cash for a business? - Answer The
company is 'stretching its payables' and deferring a cash outflow.
Why would an increase in a businesses' days in inventory consume cash? - Answer The business is
expending cash to build up its inventory levels.
Questions And Correct Answers.
What are financial modeling guidelines and why are they relevant? - 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? - Answer The company should
consider additional capital expenditure to increase the capacity of the plant.
Is the pricing forecast realistic? - 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. - 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. - Answer $29.0 million.
In terms of gross-profit, which of the following periods likely requires further investigation or analysis? -
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? - Answer An increase in sales commissions to boost sales volumes.
What is the cost of goods sold primarily driven by for a given period? - Answer Sales volume.
Why would an increase in the company's days in A/P produce cash for a business? - Answer The
company is 'stretching its payables' and deferring a cash outflow.
Why would an increase in a businesses' days in inventory consume cash? - Answer The business is
expending cash to build up its inventory levels.
