3 Financial Statements - Interview Question Model

($ in Millions, Except Per Share Amounts and Share Counts in Thousands)

Assumptions Interview Questions

Tax Rate: 40% Revenue Changes By… Goodwill Impairment Changes By…
Interest Rate On Debt: 10% Cost of Goods Sold Changes By… PP&E Write-Down Changes By…
Current Share Price: $10.00 SG&A Changes By… Debt Write-Down Changes By…
Par Value of Stock: $1.00 Depreciation Changes By… Deferred Income Taxes Changes By…
Initial Cash Balance: $100
Accounts Receivable Changes By… Long-Term Investments Changes By…
Units for Shares: 1,000 Inventory Changes By… Long-Term Debt Changes By…
Units for Financials: 1,000,000 Accounts Payable Changes By.. Interest Income Changes By…
Accrued Expenses Changes By… $100 Dividends Declared Changes By…
Deferred Revenue Changes By… Dividends Issued Changes By…
CapEx Changes By… Equity Bailout Changes By…
Re-Purchase Shares Changes By…
Issue New Shares Changes By…

Income Statement Balance Sheet Cash Flow Statement

Old New Old New
Assets: Operating Activities:
Revenue: $1,000 $1,000 Current Assets: Net Income:
Cost of Goods Sold: $100 $100 Cash & Cash-Equivalents: $550 $590 Depreciation:
Gross Profit: $900 $900 Accounts Receivable: $100 $100 Stock-Based Compensation:
Operating Expenses: Inventory: $200 $200 Goodwill Impairment:
Research & Development: $100 $100 Total Current Assets: $850 $890 PP&E Write-Down:
Selling, General & Admin.: $100 $200 Debt Write-Down:
Total Operating Expenses: $200 $300 Long-Term Assets: Deferred Income Taxes:
Property & Equip. (PP&E): $200 $200
Depreciation: $100 $100 Long-Term Investments: $100 $100 Changes in Operating Assets & Liabilities:
Stock-Based Compensation: $100 $100 Goodwill: $100 $100 Accounts Receivable:
 Total Assets: $1,250 $1,290 Inventory:
Operating Income: $500 $400 Accounts Payable:
Interest Income / (Expense): $0 $0 Liabilities & Shareholders' Equity: Accrued Expenses:
Goodwill Impairment: $0 $0 Current Liabilities: Deferred Revenue:
PP&E Write-Down: $0 $0 Revolver: $50 $50 Cash Flow from Operations:
Debt Write-Down: $0 $0 Accounts Payable: $100 $100
Pre-Tax Income: $500 $400 Accrued Expenses: $100 $200 Investing Activities:
Income Tax Provision: $200 $160 Total Current Liabilities: $250 $350 LT Investments:
Capital Expenditures:
Net Income: $300 $240 Long-Term Liabilities: Cash Flow from Investing:
Deferred Revenue: $200 $200
Earnings Per Share: $3.00 $2.40 Long-Term Debt: $0 $0 Financing Activities:
Shares Outstanding: 100,000 100,000 Deferred Tax Liabilities: $100 $100 Dividends Issued:
Dividends Declared: $0 $0 Long-Term Debt:
Total Liabilities: $550 $650 Equity Bailout:
Re-Purchase Shares:
Shareholders' Equity: Issue New Shares:
Common Stock: $100 $100 Cash Flow from Financing:
Additional Paid-In Capital: $100 $100
Treasury Stock: $0 $0 Increase / Decrease in Cash:
Retained Earnings: $400 $340 Cash & Cash Equivalents:
Accum. Other Comp. Income: $100 $100
Total Shareholders' Equity: $700 $640

Total Liabilities & SE: $1,250 $1,290

mpairment Changes By…
e-Down Changes By…
e-Down Changes By…
ncome Taxes Changes By…

m Investments Changes By…

m Debt Changes By…
come Changes By…
Declared Changes By…
Issued Changes By…
out Changes By…
se Shares Changes By…
Shares Changes By…

w Statement
Old New
Operating Activities:
$300 $240
$100 $100
ased Compensation: $100 $100
ll Impairment: $0 $0
$0 $0
$0 $0
d Income Taxes: $0 $0

n Operating Assets & Liabilities:

s Receivable: $0 $0
 $0 $0
$0 $0
$0 $100
$0 $0
from Operations: $500 $540

Investing Activities:
$0 $0
($50) ($50)
from Investing: ($50) ($50)

Financing Activities:
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
from Financing: $0 $0

Decrease in Cash: $450 $490

sh Equivalents: $550 $590