exam 3 section 2

Question 1

present value analysis

Answer 1

$ value of future cost/income stream, calculated as of a certain datef

Question 2

future value analysis

Answer 2

future value of current expenditure/investment based on assumed rate of growth

Question 3

present value equation

Answer 3

FV/ (1+r)^n

Question 4

interest rate components

Answer 4

• inflation
• uncertainties in undertaking/enterprise
• unique, unidentifiable factors - 2%

Question 5

TVM used mostly for

Answer 5

capital projects

Question 6

payback analysis

Answer 6

how long will it take to recover amount invested in new capital asset/project

• ignore time value of $
• quick payback = less risky
• depreciation not a cash cost so not considered a deduction from cash payback

Question 7

flowcharting

Answer 7

obtain/convey understanding of a business process

Question 8

high level flowchart

Answer 8

overall understanding of a process

Question 9

mid level flowchart

Answer 9

understand steps of a process

Question 10

low level flowchart

Answer 10

guide automation of process

Question 11

earned value management

Answer 11

technique for managing large projects
- quantifies progress on project by considering funds expended, time expended, and status of deliverables

Question 12

regression analysis

Answer 12

relationship among variables

• direct linear regression = upward line where independent variable directly impacts dependent variable
• non linear = curved line

Question 13

correlation coefficient

Answer 13

degree of accuracy which regression can be used to predict results

• between 1 and -1 (perfect)
• accept .85

Question 14

multiple regressions
e pluribus unum

Answer 14

out of many, one
- multiple independent variables and choose highest correlation coefficient

Question 15

restriction of regression analysis

Answer 15

• data must be relevant
• input data must be accurate
• correlation not causation

Question 16

data mining

Answer 16

modeling and knowledge discovery for predictive not descriptive purposes
- sort through large data
- direct analyst to examin specific area
- application of software’s own analytical structure

Question 17

predictive analytics

Answer 17

analyze current and historical facts to make predictions
- used in debt collection, healthcare, supply management, customer retention

Question 18

data analytics strengths

Answer 18

review complete data sets not jsut sample
- link together multiple data sources

Question 19

starting a data analytics program

Answer 19

• define decisions and info that will inform
• collab with other agencies to collect/share data
• develop data to determine ROI on analytics program
• giver leaders clear/concise analysis

Question 20

caution for data analytics

Answer 20

• quality of data
• ensuring clear understanding of program requirements and how those are represented in data

Question 21

forensic auditing

Answer 21

exam of org/individual financial info and economic affairs to investigate theft/fraud/negligence

Question 22

steps for forensic audit

Answer 22

data collection, data prep, data analysis, reporting

Question 23

benford digital anaylsis

Answer 23

predicted on observation that more transactions begin with the number 1 than larger numbers
(more 1s than 2s more 2s than 3s etc)

• detect fraud if don’t meet expected distribution
• wont work with rule imposed limits (per diem, service charge)
• court decides whether fraud was committed

Question 24

competitive sourcing analysis

Answer 24

to decide whether to contract out or stay in house

• omb circular a-76

Question 25

steps for competitive sourcing

Answer 25

- conduct management study - prepare a performance work statement - project in house and contract costs - select best alternative

Question 26

pure ratios

Answer 26

relating one number to another to produce meaningful indicators

Question 27

comparative analysis

Answer 27

numbers or ratios compared with similar entity or operations with benchmarks

Question 28

time series analysis

Answer 28

compare against itself in prior years - percent change year to year

Question 29

common size statements

Answer 29

convert all data elements in financial statements or management repoprt to % of 100

Question 30

per capita info

Answer 30

divide data by entity's population

Question 31

liquidity ratio

Answer 31

- current ratio - quick ratio

Question 32

current ratio

Answer 32

divide current assets by current liabilities - should be at least 2 to 1 otherwise hard to meet short term obligations

Question 33

quick ratio

Answer 33

compares cash and cash equivalents to current liablities - doesn't include inventory - ideally 1 to 1

Question 34

receivable ratios

Answer 34

1. % of taxes collected = tax collections (within stated time) / tax levy 2. days receivable outstanding = (avg receivable during year / annual revenue) x 365

Question 35

inventory ratios

Answer 35

inventory turnover = revenue from sale of inventory / average inventory during period average age of inventory = 365/ inventory turnover

Question 36

operating results and budgetary cushion ratios

Answer 36

- extent to which revenue sufficient to cover costs rev/expenditure = % of exenditures covered by revenue excess revenue over expenditures / revenue = ability to generate surplus or net income unassigned fund balance / annual revenue = size of budgetary cushion * consider one time inflows separate (sale of capital assets)

Question 37

debt burden

Answer 37

measure ability to carry outstanding LT debt outstanding LT debt/population or outstanding LT debt/ assessed value of taxable property

Question 38

cost of debt service

Answer 38

portion of revenue devoted to pay debt servie total debt service / total revenue or total expenditures

Question 39

ability to finance debt

Answer 39

excess revenue over operating expenses / (principal payment + interest expense)

Question 40

soundness of pension funds

Answer 40

pension fund assets available for benefits / pension benefit obligation