#1
Which financial statement represents a company's financial position at a specific point in time?
Balance sheet
ExplanationProvides a snapshot of assets, liabilities, and equity.
#2
What is the purpose of a SWOT analysis in business decision-making?
To identify a company's strengths and weaknesses
ExplanationAssesses internal factors to make informed strategic decisions.
#3
What is the purpose of a break-even analysis in business decision-making?
To determine the point at which a company's total revenue equals its total costs
ExplanationIdentifies the level of sales needed to cover costs.
#4
Which of the following is NOT a component of the DuPont analysis?
Return on assets
ExplanationA key metric but not part of the DuPont model.
#5
Which financial metric measures a company's ability to meet its short-term obligations with its most liquid assets?
Current ratio
ExplanationIndicator of short-term liquidity position.
#6
What is the primary purpose of financial ratio analysis?
To evaluate a company's liquidity, profitability, and solvency
ExplanationAssesses various aspects of a company's financial health.
#7
Which of the following is NOT a commonly used capital budgeting technique?
Return on investment (ROI)
ExplanationNot used for long-term investment evaluation.
#8
In finance, what does the term 'leverage' refer to?
The degree to which a company uses fixed-income securities such as debt
ExplanationIndicates the proportion of debt in a company's capital structure.
#9
Which financial metric measures a company's efficiency in using its assets to generate revenue?
Asset turnover ratio
ExplanationEvaluates how effectively assets are utilized for revenue generation.
#10
What does the term 'opportunity cost' represent in business decision-making?
The cost of a specific opportunity that must be forgone in favor of another
ExplanationThe value of the next best alternative forgone.
#11
Which of the following is NOT a characteristic of a well-defined business goal?
Vague
ExplanationClear and specific goals are preferable for effective planning.
#12
What is the main objective of financial modeling in business decision-making?
To predict a company's future financial performance
ExplanationHelps forecast outcomes to aid decision-making.
#13
What does the term 'working capital' represent in financial management?
The difference between current assets and current liabilities
ExplanationFunds available for day-to-day operations.
#14
What is the primary objective of financial risk management?
To minimize the impact of potential financial losses
ExplanationProtects against adverse financial events.
#15
In capital budgeting, which technique discounts all future cash flows back to their present value?
Net present value (NPV)
ExplanationDetermines project profitability by discounting future cash flows.