#1
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance Sheet
ExplanationShows assets, liabilities, and equity at a given time.
#2
What does ROI stand for in the context of business finance?
Return on Investment
ExplanationMeasures the profitability of an investment relative to its cost.
#3
Which financial ratio is commonly used to assess a company's short-term liquidity position?
Current Ratio
ExplanationCompares current assets to current liabilities.
#4
What is the formula for calculating the Net Present Value (NPV) of an investment?
NPV = Sum of Cash Inflows - Initial Investment
ExplanationDetermines the profitability of an investment by comparing its inflows and outflows.
#5
What is the purpose of the debt-to-equity ratio in financial analysis?
To assess a company's risk and leverage
ExplanationIndicates the proportion of debt and equity used to finance a company.
#6
What is the purpose of a SWOT analysis in business finance?
To assess a company's internal strengths and weaknesses
ExplanationEvaluates internal strengths and weaknesses, and external opportunities and threats.
#7
In the context of capital budgeting, what does the term 'Payback Period' refer to?
The time it takes to recover the initial investment
ExplanationTime required to recoup the initial cost of an investment.
#8
What is the primary function of a financial manager in an organization?
Maximizing shareholder wealth
ExplanationEnhancing the value of the firm for its shareholders.
#9
What does the term 'Hedging' mean in the context of financial risk management?
Reducing the impact of adverse price movements on investments
ExplanationProtecting against unfavorable price fluctuations.