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2025 FINANCIAL STATEMENT MODELING EXAM
/ACTUAL EXAM Qs&As with RATIONALES|A+GRADE
GUARANTEE
Financial Statement Modeling Exam
Questions 1 - 4 will refer to an AEO 10K that you can download by clickinghere. Ignoring the impact of Share-based compensation expense included incost of sales, what is gross profit for the year ending 1/30/2016? o $1,267, o $1,323, o $1,326, o $1,337, o $1,372, Your answer is incorrect. RATIONALE: The correct answer is $1,323, Share-based compensation in cost of sales can be found by searching theCompany’s 10-K and is described in the Gross Profit section of Management’s Discussion and Analysis. This amount needs to be added back to Gross Profit from the Company’s Income Statement. This question uses the same AEO 10k as the previous question. What is depreciation expense for the year ending 1/30/2016? o $112.6 million o $119.6 million o $128.4 million o $140.6 million o $148.2 million Your answer is correct. RATIONALE: The correct answer is $140.6 million Depreciation expense is in the Property and Equipment section of theCompany’s 10K footnotes. Note the amount listed on the Cash Flow Statement is Depreciation AND Amortization. This question uses the same AEO 10k as the previous question. What is AEO’s share count on 3/7/2016? o 180.1 million o 180.7 million o 194.4 million o 196.2 million o 196.7 million Your answer is correct. RATIONALE: The correct answer is 180.7 million This amount can be found at the bottom of the Title page of the 10K. This question uses the same AEO 10k as the previous question. As of 1/30/2016, what is the sum of the next 5 years’ amortization expenses of AEO’s intangible assets? o $3.5 million o $9.7 million o $12.2 million
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o $15.6 million o $17.3 million Your answer is correct. RATIONALE:The correct answer is $17.3 million This amount can be found in the Intangible Assets section of the 10K Footnotes.
- Question 5 All else being equal, which of the following does NOT lead to a lower revolver balance for a Company? o Higher Cash Flow from Operations o Increased Dividends o Increase of existing cash on the Balance Sheet o Increases in Accounts Payable o Increase in Minimum cash balance o 1 and 4 only o 2 and 4 only o 3 and 5 only o 4 and 5 only o 2 and 5 only Your answer is correct. The correct answer is 2 and 5 only RATIONALE:Increased dividends would use cash that could otherwise be used to paydown the Revolver. Increase in Minimum cash balance would reduce cash available to paydown debt by keeping additional cash on the BalanceSheet. - Question 6 This question will refer to the data below. For this question, assume that: Vorsche Motor Company reported results for the fiscal year ended 12/31/2013 which included the following disclosures: Select balances as of 12/31/2013: o Gross PP&E: 28,519. o Net PP&E: 16,597. o Non-depreciable PP&E (i.e., land): 1,650. o Accumulated depreciation: 11,922. o Net PP&E (excl. land): 14,947. o During the fiscal year ended 12/31/2013 depreciation expense was $5,797.0. Assume no salvage value. What is the useful life of existing, depreciable PP&E as a 12/31/2013? (Round to nearest whole number.) o 4 Years o 5 Years o 6 Years
o Gross profit = Revenues x Gross profit margin = $10 billion x65% = $6.5 billion o EBIT = Gross profit – SG&A = $6.5 billion – $2 billion = $4.5billon o EBIT margin = EBIT / revenues = $4.5 billon / $10 billion =45%
- Question 10 A company has the following information: o 2014 Revenues of $5 billion o 2013 Accounts receivable of $400 million o 2014 Accounts receivable of $600 million What are the days sales outstanding (DSO) for this company assuming weuse average A/R balances for the calculation? o 29.2 days o 36.5 days o 44 days o 60 days Your answer is incorrect. The correct answer is 36. o DSO = Average accounts receivable / Sales x 365 days o = $500m / $5bn x 365 days o = 10% x 365 days o = 36.5 days - Question 11 A company has the following information: o 2014 share repurchase plan of $4 billion o Average share price of $60 for the year 2013 o Expected EPS growth for 2014 of 10% What should the number of shares repurchased by the company be in yourfinancial model, assuming that the company’s P/E ratio stays constant? o 56.6 million o 60.6 million o 66.7 million o 73.3 million Your answer is incorrect. The correct answer is 60.6 million Assuming that this company’s P/E ratio will stay the same, EPS growth of10% will be matched by share price growth of 10%, to $66. Number of shares repurchased = share repurchase plan / share price = $4billion / $66 per share = 60.6 million shares. - Question 12 A company has the following information: o 2013 retained earnings balance of $12 billion o Net income of $3.5 billion in 2014 o Capex of $200 million in 2014 o Preferred dividends of $100 million in 2014 o Common dividends of $400 million in 2014 What is the
retained earnings balance at the end of 2014? o $14.8 billion o $15 billion o $15.2 billion o $15.5 billion Your answer is incorrect. The correct answer is $15 billion Retained earnings at the end of 2014 = retained earnings balance in 2013
- net income – common and preferred dividends =$12bn + $3.5bn – $100m – $400m = $15bn
- Question 13 As you have now learned, Net Income is not a good estimate of Cash Flow from Operations for a Company. Which of the following is NOT an adjustment to Net Income for thepurposes of calculating Cash Flow from Operations? o Add back Taxes Paid o Add back Depreciation and Amortization o Subtract increases in Inventories o Add back increases in Accounts Payable o Add back Stock based compensationYour answer is incorrect. The correct answer is “Add back Taxes Paid” Adding back Taxes Paid is not correct. Taxes Paid are an actual cash outflow, thus do not need to be adjusted out of Net Income. The other answers are all essential adjustments made to Net Income, to derive actual Cash Flow from Operations. - Question 14 For the next several questions, it is July 2017 and you are an investment banking analyst tasked with forecasting the financials of American Eagle Outfitters. You have been given a partially filled in model template. Please download it by clicking here. Using the assumptions already in the model, what is gross profit for theyear ending 1/31/2023? o $1,709, o $1,978, o $3,246, o $3,758, o $10,758, Your answer is correct. The correct answer is $1,709, Revenue should be grown at the annual rates shown in Row 114, and the projected Gross Profit margins in Row 115 should be applied to each year.Please see the Final Model spreadsheet. - Question 15 This question uses the same American Eagle Outfitters Model Template as the last.
This question uses the same American Eagle Outfitters Model Template as the last. What is the balance of Merchandise inventory as of 1/31/2025. Hint: Remember to use the assumptions in the Working capital Assumptions section. o $259, o $305, o $492, o $574, o $751, Your answer is correct. The correct answer is $492, For any given year, Merchandise inventory should be forecasted as COGS /Inventory turnover. Please see row 42 in the model for details.
- Question 19 This question uses the same American Eagle Outfitters Model Template as the last. After adding projections for the empty Current Liability accounts, what is the balance of total current liabilities as of 1/31/2025? o $463, o $476, o $677, o $847, o $909, Your answer is correct. The correct answer is $677, For any given year, the empty Current liabilities accounts should beforecasted in the following way: o Accounts payable = Payables as % of COGS * COGS o Accrued compensation and payroll taxes = Accrued comp as % of SG&A * SG&A o The future values of other Current Liability accounts arealready provided. Please see the model (rows 55 and 56) for details. - Question 20 This question uses the same American Eagle Outfitters Model Template as the last. Using the assumptions in the model, what is Cash Flow from Investing forthe year ending 1/31/2026? Make sure to read any comments and assumptions for the relevant lineitems. o $441, o $187, o - $241, o - $249, o - $253, Your answer is incorrect. The correct answer is - $253, Based on the Fixed Asset and Intangible Asset assumptions (rows 129 and134), Capital Expenditures will grow by 5% a year, and Intangible purchases are kept steady at 4,000 per year. These two amounts shouldbe linked to the components of Cash Flow from Investing (row 98 and 99).
