Business Finance and Profit Analysis Quiz

Explore 15 questions on financial statements, ratios, and formulas. Assess your understanding of business finance and profit analysis.

#1

Which of the following financial statements shows a company's revenues and expenses over a specific period?

Balance sheet
Income statement
Cash flow statement
Statement of retained earnings
#2

What is the formula for calculating the return on equity (ROE)?

Net income / Total assets
Net income / Total equity
Net income / Total liabilities
Net income / Total revenue
#3

Which financial statement reports a company's financial position at a specific point in time?

Income statement
Balance sheet
Cash flow statement
Statement of retained earnings
#4

What does the term 'ROI' stand for in finance?

Return on Investment
Return on Equity
Return on Assets
Revenue of Interest
#5

Which financial ratio measures a company's ability to cover its interest expenses with its earnings?

Operating margin
Debt service coverage ratio
Return on investment
Profit margin
#6

What is the formula to calculate gross profit?

Net sales - Cost of goods sold
Operating income - Operating expenses
Net income - Taxes
Net income - Dividends
#7

Which financial ratio measures a company's ability to pay its short-term liabilities with its short-term assets?

Current ratio
Debt-to-equity ratio
Return on investment
Asset turnover ratio
#8

What does the term 'EBITDA' stand for in finance?

Earnings Before Interest, Taxes, Dividends, and Amortization
Earnings Before Interest, Taxes, Depreciation, and Amortization
Earnings Before Income, Taxes, Depreciation, and Assets
Earnings Before Interest, Taxes, Dividends, and Assets
#9

What does the term 'EBIT' stand for in finance?

Earnings Before Interest and Taxes
Earnings Before Interest, Taxes, and Dividends
Earnings Before Income and Taxes
Earnings Before Interest and Depreciation
#10

Which financial ratio measures a company's ability to generate profit from its assets?

Return on assets (ROA)
Current ratio
Debt-to-equity ratio
Quick ratio
#11

Which valuation method estimates the intrinsic value of a company by discounting its future cash flows?

Market approach
Asset-based approach
Income approach
Cost approach
#12

What is the formula for calculating net working capital?

Current assets - Current liabilities
Total assets - Total liabilities
Net income / Total equity
Operating income - Operating expenses
#13

What is the formula for calculating free cash flow?

Operating cash flow - Capital expenditures
Net income / Total equity
Net income - Dividends
Net income / Total assets
#14

What does the term 'IRR' stand for in finance?

Internal Rate of Return
Interest Rate Ratio
Income Rate of Return
Investment Rate Ratio
#15

What is the formula for calculating the net profit margin?

(Net income / Revenue) * 100%
(Operating income / Revenue) * 100%
(Gross profit / Revenue) * 100%
(Operating expenses / Revenue) * 100%

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