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Financial Modelling & Budgeting

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Welcome to your free Financial Modelling & Budgeting

1.

In financial modelling, what is the WACC used for?

It is used to calculate the IRR

It is used to calculate whether a project's return exceeds the cost of capital

It is used to calculate whether a project's return exceeds the IRR

It is used to calculate whether a project's cash flows exceed the NPV

None

2.

If you perform a discounted cash flow analysis for a project and determine that there is a positive NPV, what does this mean?

The project's rate of return exceeds the discount rate used

There must only be one IRR solution

The project's rate of return is less than the IRR

The project's rate of return exceeds the hurdle rate

None

3.

What would be the IRR for this series of cash flows:

Year 0: $600

Year 1: $200

Year 2: $500

Year 3: $400

There is more than one IRR solution

The IRR will be negative

The IRR will be infinite

There is a single IRR of about 33%

None

4.

Which of the following is NOT one of the purposes of budgeting & forecasting?

Allocating financial resources

Controlling expenditure

Motivating staff

Ensuring compliance with accounting standards

None

5.

The best way to provide multiple scenarios in a financial model is:

Use data tables to run different sets of inputs through the model at the same time

Use pivot tables to show the results of different inputs running through the model at the same time

Save multiple versions of the file then use linked workbooks to compare the results

Create multiple sheets within one file that have different inputs and calculations, then use a summary sheet to compare the results

None

6.

If you create your financial model in months then want to consolidate the calculations to quarters and/or years, the simplest and most efficient formula to use for income and expense items would be:

INDEX/MATCH

VLOOKUP

SUMIFS

INDIRECT

None

7.

You are considering a new project and an analyst has produced the chart below for you. If your company's WACC is 8%, what would be your recommendation?

Decline the project as the it is showing a negative NPV and there are large downside risks

The project should be declined as the IRR is negative

The project has a small positive NPV using the WACC. Only proceed with this project if the downside risks can be managed and there are no better alternatives.

The project's IRR is less than the WACC so it should be accepted

None

8.

The chart for actual revenue vs budget is shown below. What should our analysis be?

Everything is fine. The variances are relatively small.

Debtor days have increased.

The company is selling more products at lower margins.

The unexpected downward trend in revenues is a cause for concern. It could indicate a drop in demand for the company's products or ineffective sales & marketing efforts.

None

9.

An analyst has produced the following chart from their financial model (NPAT = net profit after tax). What is the best analysis of this chart?

The project takes 6 years to reach profitability but after that, the project looks great so we should recommend it for approval.

The project takes too long to reach profitability so should be declined.

The forecast profits from 2025 onwards appear to unusually high. Could there be some missing expenses?

It cannot be analysed properly without seeing the NPV and IRR.

None

10.

The chart below relates to an oil & gas project. What can you conclude from looking at this chart?
(OPEX = operating expenditure, CAPEX = capital expenditure, Government take = tax paid/refunded)

The project's payback time is approximately 6 years

The project's return exceeds the company's WACC

The project requires significant additional capital expenditure in 2024 to compensate for declining oil production

All of the above

None

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Jeff Robson2023-10-12T00:21:26+08:00

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Jeff is the founding Director and Principal Business Analyst at Access Analytic Solutions. He has over 20 years’ experience in chartered accounting, business management and consulting.

Jeff holds a Masters in Applied Finance and is a Certified Information Systems Auditor. He is highly regarded and recognised around the world as an expert in the field of financial modelling and Power BI reporting. His achievements have been recognised by his peers and he is a Fellow of both the Financial Services Institute of Australasia and the Australian Institute of Management. Jeff has extensive experience in best practice management reporting, data analytics, business analysis, and financial modelling and is also an entertaining international presenter and trainer on these subjects.

Jeff is the author of a number of white papers on financial modelling on subjects such as Financial Modelling Best Practices and Financial Model Auditing. He provides training for companies throughout Australia, New Zealand, Asia, South Pacific, the Middle East, and Africa.

Yury Tokarev is a highly accomplished finance professional and international trainer with over 25 years of experience in financial modelling and advanced analytics. As a Director at Access Analytic, Yury specialises in leveraging data-driven insights to enhance strategic decision-making through sophisticated analytical tools, including Power BI and AI.

Yury’s extensive background includes developing complex financial models across various industries, automating Excel-based solutions for efficient data management, and designing Power BI reports that integrate a variety of metrics, including financial, people, and ESG indicators. His expertise uniquely positions him to address the evolving needs of senior financial professionals as they embrace digital finance and sustainability initiatives.

Prior to joining Access Analytic, Yury gained significant experience in investment banking, corporate finance, and business services and advisory. These roles provided him with a deep understanding of strategic financial planning, complex financial transactions, and advisory services, which he now leverages to deliver cutting-edge solutions in digital finance transformation and analytics.

As an engaging and interactive trainer, Yury has delivered numerous workshops and training sessions globally, helping professionals elevate their understanding of financial modelling, Power BI, and AI analytics. His teaching approach combines practical insights with real-world applications, empowering participants to effectively apply advanced analytics and AI in their strategic roles.

Wyn Hopkins
B.Sc. (Hons) Accounting & Financial Management, Microsoft MVP, Excel Expert (MS), Author

Wyn has been awarded MVP status by Microsoft every year since 2017 and is the author of the book “Power BI for the Excel Analyst”. He is known worldwide for sharing his knowledge via the Access Analytic YouTube channel with over 5 million views and 90,000+ subscribers.

He gained his Chartered Accountant qualification at PwC in 2000 and has extensive Business Analyst experience with HBOS and Barclays in the UK plus multinational clients in Perth.

Wyn is skilled in Excel and Power BI development, Power Query automation, management reporting and is an experienced Excel and Power Bl trainer.

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