#1
What is the primary objective of financial analysis?
To assess the financial health of a company
ExplanationAssessing company's financial health.
#2
What does the term 'EBITDA' stand for in financial analysis?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationEarnings metric before various expenses.
#3
What does the term 'Free Cash Flow' represent in financial analysis?
Cash generated from operating activities minus capital expenditures
ExplanationOperating cash after investments.
#4
Which financial ratio is often used to measure a company's profitability by comparing its net income to its shareholder equity?
Return on Equity (ROE)
ExplanationProfitability measure with equity.
#5
In financial analysis, what does the term 'Beta' measure?
A stock's volatility in relation to the market
ExplanationStock volatility relative to market.
#6
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance Sheet
ExplanationSnapshot of financial position.
#7
What does the P/E ratio (Price-to-Earnings ratio) measure?
Market sentiment towards a stock
ExplanationMeasure of market sentiment.
#8
Which financial ratio indicates a company's ability to meet its short-term obligations with its most liquid assets?
Current Ratio
ExplanationShort-term liquidity measure.
#9
In the context of valuation, what does the term 'WACC' stand for?
Weighted Average Cost of Capital
ExplanationCost of capital calculation.
#10
Which financial metric measures a company's efficiency in managing its inventory?
Inventory Turnover Ratio
ExplanationEfficiency in inventory management.
#11
In valuation, what does the term 'Terminal Value' refer to?
The value of a project or investment at the end of a forecast period
ExplanationValue at end of forecast period.
#12
Which valuation method is based on the idea that similar assets should have similar prices?
Comparable Company Analysis (CCA)
ExplanationValuation based on asset similarity.
#13
What is the purpose of the DuPont analysis in financial analysis?
To evaluate a company's profitability and efficiency
ExplanationEvaluating profitability and efficiency.
#14
Which of the following is considered a leading indicator of a company's financial performance?
Accounts Receivable Turnover
ExplanationIndicator of financial performance.
#15
What is the purpose of a sensitivity analysis in financial modeling?
To analyze the impact of changing key variables on financial outcomes
ExplanationImpact analysis of variable changes.
#16
What is the purpose of the Altman Z-Score in financial analysis?
To measure a company's probability of bankruptcy
ExplanationBankruptcy probability measurement.
#17
What does the term 'EBIT' stand for in financial analysis?
Earnings Before Interest and Taxes
ExplanationEarnings metric before taxes.