FSA

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Welcome to your FSA and M&A Accounting exam. The assessment consists of 30 questions testing the content covered in your classes with Pillars of Wall Street. You may use your notes and a calculator to assist you in the exam.

Once you begin your assessment, you will not be able to pause your exam for any reason, therefore, please take care of any outside activities that require your time prior to beginning the assessment. If you close the webpage while taking the exam, your results will not save. If you have poor internet connection, we encourage you to write your answers on paper as you go.

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Name Firm Code Email
1. Indicate which of the following statements below are true:
2.

Jackson issued 5,000 of new equity and used the proceeds to pay down 5,000 of long term debt.  Based on this information, which one of the following statements would be correct?

3.

Where would an impairment of inventory be reported on the cash flow statement?

4. Finlandia Company made the following transactions during its first year in business. Using the information below, calculate Finlandia’s total equity at year end.

• Investors gave Finlandia 100,000 in exchange for common shares in the company
• Finlandia borrowed 50,000 from creditors during the year and paid interest expense of 5,000
• Finlandia spent 15,000 on PP&E
• Finlandia purchased inventory for 20,000, 75.0% in cash and the remainder on credit
• Finlandia made cash sales totaling 50,000 during the year costing 20,000
• SG&A expenses totalled 5,000 during the year
• Assume no depreciation and interest income
• The tax rate is 30% of profits before tax
• Finlandia paid dividends of 4,000 during the year
5. Using the operating working capital statistics for Phoenix Ltd below, calculate the days funding required or provided by writing the number of days and required "Tied Up" or provided "Freed". 

Accounts payable days: 62
Inventory days: 20
Accounts receivable days: 35
6. Using Elixir’s balance sheet below, calculate the operating working capital for the most recent financial year.

7. Using Elixir’s balance sheet, calculate net debt for the most recent financial year. 

8. Using the following information, calculate EBITDA to be used for valuation purposes.

9. Use the following information to calculate an adjusted net income to be used for valuation purposes. 

10. Sutton Place Beverages purchased machinery valued at 2,000 at the beginning of year 1 that had an estimated useful life of 10 years and a salvage or residual value of 500. Assuming straight-line depreciation, what is the net book value at the end of year 7?
11. Minotaur purchased inventory for 100,000, paying 40,000 in cash and 60,000 on credit. The balance sheet impact would be as follows:
12. All of the following would be included in the calculation of net debt except:
13. Which one of the following is least likely to appear in cash flow from financing?
14. Using the financial information, calculate the cash flow from operating activities. 

15. Using the financial information, calculate the cash flow from investing activities. 

16. Using the financial information, calculate the cash flow from financing activities. 

17. Using the financial information, calculate EBITDA / interest expense.

18. Using the information below, calculate the total combo shareholders’ equity for Rossini after acquisition of Verdi. 

Rossini acquired 100% of Verdi for 2,000 and financed the acquisition with 500 balance sheet cash, 700 new long term debt and the remainder of the purchase price with a new equity issuance.

Verdi has no goodwill as of the acquisition date
19. Murray Hill Sweets acquires 100% of Paulus Hook Bitters for $5,000. Assuming the book value of Paulus Hook Bitters’ net assets is $3,800, there are no fair value step-ups and the target company has $300 of existing goodwill (which is part of the $3,800 in net assets), please calculate DEAL GOODWILL.
20. Urbino purchased York for 50,000 and financed the acquisition with 100.0% debt. The new debt has an annual interest rate of 5.0%. Below are Urbino’s and York’s standalone income statements one year forward from the close of the acquisition. With this information, calculate the net income for the consolidated company. Both Urbino and York have a marginal tax rate of 35.0%. 

21. Monet acquired 70.0% of Diego one year ago. At the acquisition date, Monet recorded noncontrolling interest of 200 related to its acquisition of Diego. Diego’s net income was 300 during the year and Diego paid its investors 200 in dividends during the year. Determine the ending balance of the noncontrolling interest on Monet’s balance sheet at the end of the year.
22. Indicate which statement(s) below are false?
23. Orange acquired 75% of Banana for 3,000. Using the data below calculate the deal goodwill using the full goodwill method (required under US GAAP and an option under IFRS). 

Book value of Orange equity: $2,600
Book value of Banana equity: $1,800
Book value of Banana goodwill: $200
24. Using the attached appendix, what is the company’s most recent share count in millions (basic common shares outstanding)?  

FSA & M&A Accounting Exam Appendix
25. Using the attached appendix, what is the company’s depreciation expense in the most recent financial year? 

FSA & M&A Accounting Exam Appendix
26. Using the attached appendix, what are total cash dividends paid in the most recent financial year? 

FSA & M&A Accounting Exam Appendix
27. Using the attached appendix, calculate operating working capital for the most recent financial year. Assume “short-term obligations” are interest-bearing. 

FSA & M&A Accounting Exam Appendix
28. Using the attached appendix, calculate the cleaned EBITDA for the most recent financial year. 

FSA & M&A Accounting Exam Appendix
29. Using the attached appendix, calculate the company’s marginal tax rate for the most recent financial year.

FSA & M&A Accounting Exam Appendix
30. Using the attached appendix, calculate the company’s net debt as of the most recent balance sheet date. Assume “short-term obligations” are interest-bearing. 

FSA & M&A Accounting Exam Appendix