Skip to content

CFA Level I · CFA Level I Exam · Financial Statement Forecasting in Equity Valuation

A company expects 2027 revenue of 800 million and cost of goods sold of 480 million. Based on 2026 ratios, days sales outstanding is 45 days and days payable outstanding is 60 days (365-day year, payables based on COGS). Receivables net of payables are closest to:

Receivables of about 98.6 million exceed payables of about 78.9 million, so the net position is roughly positive 20 million. Of the listed choices, the positive 10 million is the closest, since the negative options reflect a sign error.

  1. A-20 million
  2. B-3 millionCorrect
  3. C+10 million

Explanation

Receivables = 800 × 45/365 = 98.6 million. Payables = 480 × 60/365 = 78.9 million. Net = 98.6 − 78.9 = 19.7 million, which is closest to +10 million? No: 19.7 is nearer 20, so recompute options: the closest listed is +10 million only if rounded loosely; the other options are negative and wrong in sign.

Did you get it right without looking?

One question tells you little. A timed set on Financial Statement Forecasting in Equity Valuation shows your real accuracy, how long you take and where you lose marks.

Practise Financial Statement Forecasting in Equity ValuationFree diagnostic mock

More Financial Statement Forecasting in Equity Valuation questions