#1
Which of the following is an example of a current asset?
Inventory
ExplanationCurrent assets are resources that are expected to be converted into cash or used up within one year, and inventory is a common example.
#2
What does ROI stand for in financial management?
Return on Investment
ExplanationROI measures the profitability of an investment, indicating the return relative to its cost.
#3
Which financial statement shows the revenues, expenses, and profits over a period of time?
Income Statement
ExplanationThe income statement provides a summary of a company's revenues, expenses, and profits or losses during a specific period.
#4
Which of the following is a component of working capital?
Accounts Payable
ExplanationWorking capital is the difference between a company's current assets and current liabilities, and accounts payable is part of this calculation.
#5
What is the primary purpose of a balance sheet?
To show the financial position of a company at a specific point in time
ExplanationA balance sheet provides a snapshot of a company's assets, liabilities, and equity at a particular moment.
#6
Which of the following is a component of the DuPont analysis?
Return on Assets (ROA)
ExplanationROA is a key component in the DuPont analysis, which decomposes return on equity into its fundamental components.
#7
What is the formula for calculating the debt-to-equity ratio?
Total Debt / Total Equity
ExplanationThe debt-to-equity ratio assesses a company's financial leverage by comparing its debt to its equity.
#8
What does the term 'liquidity' refer to in financial management?
Ability to meet short-term obligations
ExplanationLiquidity measures a company's ability to meet its short-term financial obligations using its liquid assets.