AI for Financial Modeling in Excel Quiz

Answers and explanations appear as you take the quiz.

1. In a correctly linked three-statement model, where does net income flow after the income statement?
   • Only into the DCF discount rate
   • Into retained earnings on the balance sheet and into the first line of the cash flow statement
   • Directly into accounts receivable
   • It replaces ending cash on the balance sheet
2. An AI-generated model balances in every forecast year. What does that actually prove?
   • The valuation is accurate
   • The model contains no hardcoded numbers
   • The discount rate was chosen correctly
   • Only that the model is internally consistent; wrong assumptions can still produce a balanced but wrong valuation
3. Why is a perpetual growth rate above WACC a problem in a Gordon growth terminal value?
   • The formula, next year's free cash flow divided by (WACC minus g), gives a negative or meaningless result
   • Excel refuses to calculate any growth rate above 3 percent
   • It automatically creates a circular reference
   • It converts the model from millions to thousands
4. Which Excel technique does the guide suggest for finding hardcoded numbers hiding in calculation rows?
   • Applying conditional formatting to fonts
   • Using Freeze Panes on the header row
   • Using Go To Special for constants, or showing formulas with Ctrl+`
   • Sorting each column in ascending order
5. An AI-written SUM formula stops one row short of the data. Why is this kind of error especially dangerous?
   • Excel shows a red error flag that users learn to ignore
   • The model keeps calculating with no warning while giving the wrong answer
   • It deletes the missing row from the workbook
   • It only affects charts, not results
6. Calculating interest on average debt in a model creates what issue, and how should it be handled?
   • A units mismatch, fixed by converting everything to millions
   • A sign flip, fixed by multiplying interest by negative one
   • A broken link to the income statement, fixed by hardcoding interest
   • A circular reference, handled by enabling iterative calculation deliberately with a circuit-breaker switch
7. Which pair of check rows does the guide recommend adding to a three-statement model?
   • Assets minus liabilities and equity equals zero, and ending cash on the cash flow statement equals balance sheet cash
   • Revenue equals net income, and WACC equals growth
   • Every row sums to 100 percent, and every column is bold
   • Depreciation equals capital spending, and tax equals zero
8. According to the guide, how much review should AI-generated model output get compared with a junior analyst's work?
   • Much less, because AI does not make arithmetic mistakes
   • None, if the model balances
   • The same line-by-line review
   • Only a check of the final valuation number