#1
Which financial statement reports a company's revenues and expenses?
Income statement
ExplanationReports company's financial performance over a period.
#2
What does ROI stand for in finance?
Return on Investment
ExplanationMeasures profitability of an investment relative to its cost.
#3
What does EBITDA stand for?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationIndicator of company's operational performance.
#4
Which financial ratio measures a company's ability to meet short-term obligations with its most liquid assets?
Quick ratio
ExplanationAssesses company's liquidity position.
#5
What is the primary objective of financial management?
Maximize shareholder wealth
ExplanationFocuses on increasing shareholder value.
#6
What is the formula to calculate the Debt-to-Equity ratio?
Total debt / Total equity
ExplanationIndicates proportion of debt to equity financing.
#7
What is the Modigliani-Miller theorem primarily concerned with?
Capital structure
ExplanationAddresses firm's optimal capital structure.
#8
What is the primary function of a corporate treasurer?
To manage financial risk and liquidity
ExplanationOversees company's financial risk and liquidity.
#9
What does the term 'CAPM' stand for in finance?
Capital Asset Pricing Model
ExplanationQuantifies relationship between risk and expected return.
#10
What is the formula to calculate the Price-Earnings (P/E) ratio?
Market price per share / Earnings per share
ExplanationEvaluates company's stock price relative to earnings.
#11
Which of the following is not a component of the DuPont analysis?
Inventory turnover
ExplanationMeasures company's profitability.
#12
What does the term 'Black-Scholes Model' refer to in finance?
A model for valuing stock options
ExplanationEstimates the price of stock options.
#13
What does the term 'working capital' represent?
Current assets minus current liabilities
ExplanationMeasure of company's short-term financial health.
#14
What does the term 'hurdle rate' refer to in finance?
The rate of return required by investors to undertake a project
ExplanationMinimum acceptable rate of return.
#15
Which financial statement shows a company's financial position at a specific point in time?
Balance sheet
ExplanationSnapshot of company's assets, liabilities, and equity.