#1
Which of the following financial statements shows a company's revenues and expenses over a specific period?
Income statement
ExplanationShows company's revenue and expenses over a period.
#2
What is the formula for calculating the return on equity (ROE)?
Net income / Total equity
ExplanationNet income divided by total equity.
#3
Which financial statement reports a company's financial position at a specific point in time?
Balance sheet
ExplanationReports financial position at a point in time.
#4
What does the term 'ROI' stand for in finance?
Return on Investment
ExplanationMeasures return on investment.
#5
Which financial ratio measures a company's ability to cover its interest expenses with its earnings?
Debt service coverage ratio
ExplanationMeasures ability to cover interest expenses.
#6
What is the formula to calculate gross profit?
Net sales - Cost of goods sold
ExplanationNet sales minus cost of goods sold.
#7
Which financial ratio measures a company's ability to pay its short-term liabilities with its short-term assets?
Current ratio
ExplanationMeasures short-term liquidity.
#8
What does the term 'EBITDA' stand for in finance?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationEarnings before certain expenses.
#9
What does the term 'EBIT' stand for in finance?
Earnings Before Interest and Taxes
ExplanationEarnings before interest and taxes.
#10
Which financial ratio measures a company's ability to generate profit from its assets?
Return on assets (ROA)
ExplanationMeasures profit generated from assets.
#11
Which valuation method estimates the intrinsic value of a company by discounting its future cash flows?
Income approach
ExplanationValues company based on future cash flows.
#12
What is the formula for calculating net working capital?
Current assets - Current liabilities
ExplanationDifference between current assets and liabilities.
#13
What is the formula for calculating free cash flow?
Operating cash flow - Capital expenditures
ExplanationOperating cash flow minus capital expenditures.
#14
What does the term 'IRR' stand for in finance?
Internal Rate of Return
ExplanationRate of return on an investment.
#15
What is the formula for calculating the net profit margin?
(Net income / Revenue) * 100%
ExplanationPercentage of net income relative to revenue.