#1
What does ROI stand for in finance?
Return on Investment
ExplanationMeasure of profitability relative to investment cost
#2
Which financial statement shows a company's revenues and expenses over a period of time?
Income Statement
ExplanationReports financial performance over a specific period
#3
What does the term 'EBIT' stand for in finance?
Earnings Before Interest and Taxes
ExplanationIndicator of a company's profitability
#4
Which financial statement reports a company's assets, liabilities, and shareholders' equity at a specific point in time?
Balance Sheet
ExplanationSnapshot of a company's financial position
#5
What is the formula for calculating the Debt-to-Equity Ratio?
Total Debt / Total Equity
ExplanationAssessment of a company's financial leverage
#6
What does the term 'working capital' represent?
Current assets minus current liabilities
ExplanationIndicator of a company's short-term financial health
#7
What does EBITDA stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationIndicator of a company's operating performance
#8
Which of the following is a financial ratio that measures a company's ability to pay off its short-term liabilities with its current assets?
Quick Ratio
ExplanationAssessment of liquidity and short-term financial health
#9
Which of the following is NOT a component of the DuPont analysis?
Revenue
ExplanationAnalysis of return on equity
#10
What does the 'inventory turnover ratio' measure?
How quickly a company sells its inventory
ExplanationEfficiency of inventory management
#11
Which of the following is a measure of a company's profitability?
Return on Assets
ExplanationIndicator of how profitable a company is relative to its total assets
#12
What is the formula for calculating the Net Present Value (NPV) of an investment?
NPV = Cash Inflows - Initial Investment
ExplanationMeasurement of an investment's profitability
#13
What is the formula for calculating the Weighted Average Cost of Capital (WACC)?
(E/V) x Re + (D/V) x Rd x (1 - Tax Rate)
ExplanationAverage rate of return a company expects to compensate all its different investors
#14
What is the formula for calculating the Free Cash Flow (FCF) to Equity?
FCF to Equity = Net Income - Dividends
ExplanationCash flow available to shareholders after all expenses, reinvestment, and debt payoff
#15
What is the formula for calculating the Economic Order Quantity (EOQ) for inventory management?
EOQ = (2DS / H)^0.5
ExplanationOptimal order quantity minimizing total inventory costs