#1
Which financial statement provides an overview of a company's financial position at a specific point in time?
Balance Sheet
ExplanationSnapshot of assets, liabilities, and equity.
#2
What does the term 'ROI' stand for in financial management?
Return on Investment
ExplanationRatio of profit or loss relative to investment.
#3
In the context of cash flow, what does 'free cash flow' represent?
Cash available for distribution to shareholders
ExplanationAmount of cash generated after expenses and investments.
#4
What is the primary purpose of a budget in financial management?
To forecast future financial performance
ExplanationPlan for income and expenditure.
#5
What is the concept of 'working capital' in financial management?
Current assets minus current liabilities
ExplanationMeasure of liquidity and operational efficiency.
#6
Which cash flow category represents the cash received or paid from the company's core operating activities?
Operating Cash Flow (OCF)
ExplanationPrimary source of cash.
#7
What is the role of a CFO (Chief Financial Officer) in a company?
Handling financial planning and analysis
ExplanationOversees financial strategy and reporting.
#8
What does the 'payback period' represent in the context of capital budgeting?
The time it takes for a project to generate positive cash flows equal to its initial investment
ExplanationTime for investment recovery.
#9
Which financial ratio measures a company's ability to meet its short-term obligations with its most liquid assets?
Current Ratio
ExplanationIndicator of liquidity.
#10
What does the term 'Liquidity' refer to in financial management?
Ability to sell assets quickly without loss of value
ExplanationEase of converting assets into cash.
#11
In financial modeling, what does the term 'DCF' stand for?
Discounted Cash Flow
ExplanationValuation method based on future cash flows.
#12
What is the purpose of the 'time value of money' concept in financial management?
To assess the impact of interest rates over time
ExplanationEvaluation of cash flow timing.
#13
What is the formula for calculating the Net Present Value (NPV) of a project?
NPV = Sum of Present Values - Initial Investment
ExplanationAssessment of project profitability.
#14
In financial management, what does the term 'Hedging' refer to?
Minimizing risk by offsetting potential losses
ExplanationProtection against adverse price movements.