#1
Which financial statement provides a snapshot of a company's financial position at a specific point in time?
Balance sheet
ExplanationIt shows assets, liabilities, and equity at a given moment.
#2
What does ROI stand for in finance?
Return on Investment
ExplanationIt measures the profitability of an investment relative to its cost.
#3
What is the purpose of the income statement?
To provide a summary of a company's revenues and expenses over a period
ExplanationIt shows the profitability of a company during a specific period.
#4
Which financial metric measures a company's efficiency in using its assets to generate revenue?
Return on Assets (ROA)
ExplanationIt evaluates how efficiently a company is using its assets to generate profit.
#5
Which financial ratio measures a company's ability to meet short-term liabilities with its short-term assets?
Current Ratio
ExplanationIt assesses a company's ability to pay short-term obligations with short-term assets.
#6
What is the formula for calculating gross profit margin?
(Revenue - Cost of Goods Sold) / Revenue
ExplanationIt shows the proportion of revenue that exceeds the cost of goods sold.
#7
Which of the following represents a liability in accounting?
Accounts payable
ExplanationIt's the money a company owes to its suppliers.
#8
What is the formula for calculating the debt-to-equity ratio?
Total debt / Total equity
ExplanationIt measures the proportion of debt relative to equity in financing a company's assets.
#9
What does the term 'EPS' stand for in finance?
Earnings Per Share
ExplanationIt measures a company's profitability per outstanding share of its common stock.
#10
Which financial statement shows changes in equity accounts over a specific period?
Statement of retained earnings
ExplanationIt outlines changes in retained earnings over a period.
#11
Which financial statement provides details about a company's cash inflows and outflows from operating, investing, and financing activities?
Cash flow statement
ExplanationIt shows how changes in balance sheet accounts affect cash and cash equivalents.
#12
What does the term 'EBIT' stand for in finance?
Earnings Before Interest and Taxes
ExplanationIt measures a company's operating performance without considering tax and interest expenses.
#13
In finance, what does the term 'EBITDA' stand for?
Earnings Before Interest and Taxes, Depreciation, and Amortization
ExplanationIt represents a company's earnings before non-operating expenses.
#14
What is the formula for calculating free cash flow?
Operating cash flow - Capital expenditures
ExplanationIt represents the cash a company generates from its operations after capital expenditures.
#15
What does the DuPont analysis evaluate?
Return on Equity (ROE)
ExplanationIt breaks down the components of ROE to analyze what drives its changes.
#16
What does the term 'liquidity' refer to in finance?
The ease of converting assets into cash without significant loss
ExplanationIt's the ability to convert assets into cash quickly without a significant decrease in value.
#17
Which financial metric measures a company's efficiency in managing its inventory?
Inventory Turnover Ratio
ExplanationIt measures how many times a company sells its average inventory in a period.