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Practice Test 10 - CPA Bar

20 questions. Answer them in any order, then submit to see your score and every explanation.

  1. A company reports EBIT of $600,000 and interest expense of $120,000. What is the times interest earned ratio?
  2. A company's free cash flow yield is 2.5% (FCF divided by market cap) while its earnings yield (EPS divided by price) is 6.5%. Which concern does this large gap raise?
  3. Which of the following KPIs would be most appropriate for evaluating the performance of this new strategy?
  4. Using the same annual forecast of $12,000,000 and a Q1 seasonal index of 0.85, what is the forecasted Q1 revenue?
  5. A private technology consulting firm has experienced a drop in net income and is assessing owner returns. Selected year-end data (in thousands): Net income 420; Average equity 3,500. ROE is 420/3,500 = 12.0%; industry benchmark ROE is 18.0\%. What insight does the ROE provide regarding the company's profitability?
  6. In the context of data analytics, the term 'data scrubbing' refers to which of the following?
  7. In strategic management, a SWOT analysis is best used to accomplish which of the following?
  8. Clearfield Manufacturing reports cost of goods sold of $2,400,000 and average inventory of $400,000. What is the inventory days on hand?
  9. A company develops three revenue scenarios for Year 3: best case $8,000,000 (25% probability), base case $6,000,000 (55% probability), worst case $4,000,000 (20% probability). What is the probability-weighted expected revenue?
  10. A project has a present value of future cash flows of $720,000 and requires an initial investment of $600,000. What is the profitability index?
  11. A pro forma financial forecast is best described as which of the following?
  12. Which of the following is an example of a preventive control rather than a detective control?
  13. An authorization control test of 60 purchase orders finds 4 approved by employees not on the authorized approver list at the time of approval. Which conclusion is most appropriate?
  14. A company reports: revenue $10,000,000, COGS $6,500,000, SGA expenses $2,000,000, depreciation $400,000, interest expense $300,000, and income tax expense $225,000. What is net income?
  15. A two-way sensitivity analysis of a DCF model shows NPV is positive in all 9 cells at a 10% discount rate, but negative in 6 of 9 cells at a 12% discount rate. What is the most analytically appropriate conclusion?
  16. A private wholesaler wants to present projected monthly sales growth (%) for the next 9 months alongside the last 24 months of historical sales growth (%) to support a covenant compliance forecast. The objective is forecasting and communicating how projections compare with history. What visualization technique should be used for forecasting the data?
  17. A cash collections budget for Q2: Q2 credit sales $400,000 (60% collected in quarter of sale, 35% next quarter, 5% uncollectible). Q1 credit sales were $360,000 (35% collected in Q2). What are total Q2 cash collections?
  18. A company's risk assessment identifies a high-likelihood, low-impact risk and a low-likelihood, high-impact risk. Limited resources are available for mitigation. Which analytical framework best guides resource allocation?
  19. ABC product costs are least decision-useful when which condition holds?
  20. A stock pays an annual dividend of $3.00 per share. Dividends are expected to grow at 4% per year in perpetuity and the required rate of return is 10%. Using the Gordon Growth Model, what is the estimated intrinsic value per share?

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