Free CPA BAR (Business Analysis & Reporting) Business Analysis Practice Questions

Business analysis on the CPA BAR discipline exam covers financial ratio analysis, cost-volume-profit analysis, budgeting and forecasting techniques, variance analysis, and economic value added (EVA). BAR is the most general-purpose discipline section.

466 Questions
220 Easy
141 Medium
105 Hard
2026 Syllabus

Sample Questions

Question 1 Easy
Which of the following best describes prescriptive analytics?
Solution
B is correct.

Prescriptive analytics goes beyond describing or predicting outcomes; it recommends specific actions to achieve desired results using optimization models, simulations, and decision analysis. It answers the question: what should we do? The four types form a hierarchy: descriptive, diagnostic, predictive, prescriptive.
Question 2 Medium
A pro forma projects total assets of $5,200,000. Management targets a debt-to-equity ratio of 0.60. How much debt and equity should be projected?
Solution
D is correct.

Setting D=0.60ED = 0.60E and D+E=5,200,000D + E = 5{,}200{,}000, so 1.60E=5,200,0001.60E = 5{,}200{,}000; E=3,250,000E = 3{,}250{,}000; D=1,950,000D = 1{,}950{,}000. Check: 1,950,0003,250,000=0.60\frac{1{,}950{,}000}{3{,}250{,}000} = 0.60.
Question 3 Hard
Clearwater Inc. projects FCFs of $2,000,000 per year for 5 years. Terminal growth rate is 3%, WACC is 9%. PV annuity factor (5 yrs, 9%) = 3.8897. (1.09)^5 = 1.5386. What is total enterprise value?
Solution
A is correct.

PV of 5-year FCFs =2,000,000×3.8897=7,779,400= 2{,}000{,}000 \times 3.8897 = 7{,}779{,}400. Terminal value at Year 5 =2,000,000×1.030.09−0.03=2,060,0000.06=34,333,333= \frac{2{,}000{,}000 \times 1.03}{0.09 - 0.03} = \frac{2{,}060{,}000}{0.06} = 34{,}333{,}333. PV of TV =34,333,3331.5386=22,315,000= \frac{34{,}333{,}333}{1.5386} = 22{,}315{,}000. Enterprise value:
7,779,400+22,315,000=$30,094,4007{,}779{,}400 + 22{,}315{,}000 = \$30{,}094{,}400
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Guides & Articles

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