Dening the Standard of Excellence in Business Planning, Budgeting and Forecasting
Beta Examination Preparation Guide
The Examination Recommended Study Plan Development Recommended Study Strategies Test Taking Tips Sample Test Questions and Answer Key
Study Strategies and Test Taking Tips
The following strategies and test taking tips are provided to help you better prepare for the FP&A exam. Please refer to the Rules and Regulations on the FP&A website (www.FPAcert.org/Rules) for important information on scheduling your exam and what to expect once you arrive at the test center. Regardless of how well you study for the exam, your efforts will go unrewarded if you do not fully comply with exam scheduling and test center admission requirements. The Association for Financial Professionals (AFP) wishes you the best in your efforts to prepare for the exam.
The Examination The FP&A exam consists of two parts Part I and Part II that require a mastery of the critical skills, knowledge and abilities involved in the corporate nancial planning & analysis function. The parts may be taken together or separately. Each part contains questions in several different areas of expertise know as knowledge domains. These domains can be found on our website: www.FPAcert.org/ TestSpecs. Both parts of the exam will be offered in the Beta testing window February 1 March 31, 2014. Part I Financial Acumen is a 100-150 question computer-based exam. Part II Financial Analysis is a 130-170 question computerbased exam. There are multiple versions of the test. All versions are psychometrically equated to provide fairness to all candidates. The questions will have differing degrees of difficulty. There is no penalty for incorrect answers and both scored and unscored questions will be included on the exam. Unscored questions are included to gather data on their validity. While it is predetermined which questions will not be scored, candidates will not be able to distinguish them from the scored questions. There are two types of exam questions: multiple-choice and spreadsheet based. Multiple-choice items will appear as in most tests with a question and multiple answer choices. The format for the spreadsheet based items will change slightly depending on the contents of the item. Examples of spreadsheet based questions include items that ask the candidate to perform a calculation or give a data table and ask the candidate to perform an analysis. Spreadsheet questions will all have four areas an area for the problem statement, an area for the answer, an area for the stimulus material, data tables, etc. and an open worksheet area. You can use any portion of the worksheet area to calculate your answer(s). You can reference or copy the data in the stimulus area but you cannot change the stimulus material nor can you type in cells in that area. You will enter your answer in the answer box(s) provided. You cannot type in any other cells in the answer area. You will see three buttons on the top of the window: Cut, Copy and Paste in addition to the normal navigation buttons which appear for multiple-choice items (next, previous, help, end exam, navigation, etc.). All items will also have a separate scratch spreadsheet button in lieu of the traditional calculator button. This opens a blank spreadsheet for candidates to make calculations or notes for themselves as they work through an item. Please note that the scratch spreadsheet does not have a memory function, so any information a candidate enters on the scratch spreadsheet will be lost if they close it. All spreadsheet items will contain at least one tab for the problem itself. This tab contains the areas listed above. Items may contain additional tabs for additional instructions or for additional background material. These items may require one or more responses. Responses may be free numeric response (where you will enter a value in the answer box) or selected response (where you will select an answer from a pop up box.) Spreadsheet items are scored as correct or incorrect. To be scored as correct, you must place a correct response in every answer box provided. A tutorial of the spreadsheet will be available on the FP&A website (www.FPAcert.org) and the Pearson VUE website (www.pearsonvue.com/afp) before the beginning of the Beta testing window (February 1 March 31, 2014).
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Study Strategies and Test Taking Tips(continued)
Recommended Study Plan Development Allow a sufficient period for studying. Review the knowledge domains to determine how familiar you are with the content. Identify your knowledge gaps. This means that you need to identify what you do not know. If you are using the AFP Financial Planning & Analysis Learning System, take the pre-test to identify content areas on which you need to focus extra study time. With career, family, and other demands, you may nd that your study time is limited. While a thorough review of the exam content is benecial, you will need to devote attention to areas that are less familiar to you. need to submit a Re-Examination form and pay the reexamination registration fee. If you are unsure about how to use the computer, or if you have any questions about the procedures for the exam, ask the testing center administrator before the exam begins. Programmable calculators, phones, smartphones, and PDAs are not allowed. An on-screen spreadsheet similar to those commercially available will be provided on the testing computer. This spreadsheet can be used as scratch paper for any needed calculations. White boards for scratch calculations will also be distributed by the exam proctor. There is no penalty for incorrect answers, so plan to answer every question. You are not penalized for guessing. After you have agreed to the NDA and the exam has begun, write difficult-to-remember formulas and concepts on your white board for later use. Answer questions that are obvious to you rst. Mark difficult questions to come back to later. Every question, whether it is a denition or a complicated calculation, is worth the same number of points. Make your best selection and/or mark it for later review and move on to the next question. Do not go too fast, and never skim questions or answers. You may end-up making careless mistakes. Let your original answer stand unless you are completely sure about the new answer. Do not let your work experience dictate how you answer a question. The exam is testing your knowledge of professional standards. I gnore the other test-takers. Their anxiety can be contagious. Relax the night before the test and get a good nights sleep. You have studied well in advance, so the night before the test is time to relax. Make sure you know exactly where the test center is located. If possible, drive to the center the day before the exam. Be sure to leave yourself plenty of time to get there on exam day.
Recommended Study Strategies
D etermine a study location that will allow you uninterrupted study periods. C reate ash cards or recordings to review exam material. This will reinforce your learning. A rrange your study time by the percentage of test questions from each domain (These domains can be found on our website: www.FPAcert.org/TestSpecs) and the amount of information you already know. D evelop and share test questions with other candidates to challenge your knowledge. This will help you drill down into the material and acquire a greater understanding of some concepts. T ry to closely simulate an exam experience. We strongly encourage candidates to test themselves in half the time that will be given during the actual exam. By doing so, you will allow yourself enough time to go back and review questions and answers. F amiliarize yourself with the way the exam questions are structured and how the test will function from a technical standpoint.
Test Taking Tips
U pon entering the testing room, immediately agree to the onscreen non-disclosure agreement (NDA). Failure to do so within ve (5) minutes of entering the testing room will cause your exam to lock and you will forfeit your eligibility of that exam part for this window. To take that exam part during the next window, you will Certied Corporate FP&A Professional
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Sample Test Questions
The following questions are similar to those on the FP&A examination. By reviewing them, you can familiarize yourself with the types of questions on the examination. These sample questions do not necessarily reect the composition of the actual examination in terms of topic area emphasis, the mixture of calculations, denitions and application type questions or the level of difculty of actual exam questions. The Answer Key can be found after Question 10.
Exam Part I.B 1. Which type of graphic would be most effective for presenting sales that are affected by seasonality? A. Bubble chart B. Line chart C. Bar chart D. Pie chart
Exam Part I.B 3. What does internal rate of return represent? A. The rate at which net present value is negative B. The rate at which net present value is maximized C. The rate at which net present value is zero D. The rate at which net present value is minimized
Exam Part I.A 5. Which benchmark can an FP&A professional calculate based on information normally found on a corporate annual report? A. Return on equity B. Manufacturing cost per unit of production C. Sales per full-time employee D. Human resource expenses to sales
Exam Part I.A 2. An FP&A professional is researching a competitors nancial condition. Which nancial statement is the best source of data for determining the competitors ability to repay its debt? A. The competitors income statement B. The competitors statement of retained earnings C. The competitors statement of cash ow D. The competitors balance sheet
Exam Part I.A 4. The FP&A team at a large company has been tasked with implementing an enterprise resource planning (ERP) system to streamline budgeting and forecasting. Who should the FP&A manager collaborate with during the requirements stage of the project? A. FP&A staff, information technology staff, and procurement staff B. Business units, FP&A staff, and information technology staff C. Business units, procurement staff, and auditors D. FP&A staff, information technology staff, and vendors Exam Part II.A 6. An FP&A professional wants to quantify the strength and direction of the relationship between overhead expenses and employee head count in a companys business units. What quantitative measure should be computed in this analysis? A. Correlation coefficient B. Standard deviation C. Weighted average D. Condence interval
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Sample Test Questions
Exam Part II.C 7. Problem Statement: A company has run a multiple regression analysis between units sold (Y), advertising spent (X1), and sale price (X2), obtaining the function: Y = 30,005 + 0.4(X1) 0.5(X2) The company has decided to use this function to predict future sales. How much revenue would the company generate if it assigns an advertising budget of $200,000 and denes the sales price of its product at $10? Exam Part II.A 9. Problem Statement: A companys scal year is the calendar year. Total direct costs forecasted for a scal year are $150,000 and year-to-date direct costs at the end of March are $31,000. Calculate the direct cost variance if the spend rate remains unchanged throughout the year. Drop down choices are favorable and unfavorable Exam Part II.A 10. Problem Statement: The following information is provided for a company. Calculate the collection ratio for the calendar year (rounded to 4 decimal places). Year to date billings as of 11/30: $740M Year to date collections as of 11/30: $655M December beginning accounts receivable balance: $80M December billings: $60M December ending accounts receivable balance: $49M
Exam Part I.A 8. Problem Statement: The consumer price index (CPI) was 204.1 in Year 1 and 207.4 in Year 2. Calculate the rate of ination between Year 1 and Year 2 (rounded to two decimal places).
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Sample Test Answer Key
1. B 2. D 3. C 4. B 5. A 6. A 7. Answer: $1,100,000 Rationale: Calculation as follows: Unit Sold = 30,005 + 0.4 x 200,000 - 0.5 x 10 Unit Sold = 30,005 + 80,000 - 5 Unit Sold = 110,000 8. Answer: 1.62% Rationale: The formula to determine the rate of ination is equal to the growth rate in CPI from one year to the next. Rate of Ination = (CPI of most recent year-CPI of previous year) / CPI of previous year x 100 9. Answer: $26,000 Favorable Rationale: In order to arrive at the solution calculate the annualized amount of direct expenses based on the stated burn rate and month in the year. Total direct expenses in 3 months are $31,000. Annualized direct expenses will be 12 / 3 x 31,000 = $124,000. $150,000-$124,000 = $26,000 Favorable. 10. Answer: 0.935 Rationale: December Beginning AR balance + MTD December Billings December Ending AR balance = MTD December Collections YTD November Collection + MTD December Collections = YTD December Collections YTD December Collections / YTD December Billings = collection ratio
Revenue = 110,000 Units Sold x $10 per Unit Revenue = $1,100,000
About AFP Headquartered outside Washington, D.C., the Association for Financial Professionals (AFP) is the professional society that represents nance executives globally. AFP established and administers the Certied Treasury Professional and Certied Corporate FP&A Professional credentials, which set standards of excellence in nance. The quarterly AFP Corporate Cash Indicators serve as a bellwether of economic growth. The AFP Annual Conference is the largest networking event for corporate nance professionals in the world. 4520 East-West Highway | Suite 750 | Bethesda, MD 20814 T: +1 301.907.2862 | F: +1 301.907.2864 | www.AFPonline.org
AFP, Association for Financial Professionals and the AFP logo are registered trademarks of the Association for Financial Professionals. FP&A, Certified Corporate FP&A Professional and the FP&A logo are trademarks of the Association for Financial Professionals. 9/13.
