#1
Which financial statement reports a company's revenues and expenses over a specific period?
Income Statement
ExplanationReports company's financial performance.
#2
Which financial statement summarizes a company's assets, liabilities, and shareholder's equity at a specific point in time?
Balance Sheet
ExplanationSnapshot of company's financial position.
#3
Which financial statement shows the changes in a company's retained earnings over a specific period?
Statement of Retained Earnings
ExplanationTracks changes in equity.
#4
What does the term 'working capital' represent?
The difference between a company's current assets and current liabilities
ExplanationMeasure of operational liquidity.
#5
What is the formula for calculating the debt-to-equity ratio?
Total Debt / Total Equity
ExplanationRelative financing structure.
#6
What does the term 'operating cash flow' represent?
The cash flow generated from a company's core business operations
ExplanationCash generated from operations.
#7
What does the current ratio measure?
A company's ability to pay short-term obligations with its short-term assets
ExplanationMeasures liquidity.
#8
What does the debt-to-equity ratio measure?
The proportion of debt a company uses to finance its assets relative to its equity
ExplanationAssesses financial leverage.
#9
Which financial ratio measures a company's ability to generate profit from its operating activities?
Operating Profit Margin
ExplanationEfficiency of profit generation.
#10
What does the quick ratio measure?
A company's ability to pay short-term obligations with its most liquid assets
ExplanationMeasures immediate liquidity.
#11
What is the DuPont analysis used for in financial statement analysis?
To assess a company's profitability by breaking down its return on equity (ROE)
ExplanationDecomposes ROE.
#12
Which financial ratio measures a company's efficiency in managing its assets to generate sales revenue?
Asset Turnover Ratio
ExplanationEfficiency of asset utilization.
#13
What does the term 'EBITDA' stand for in finance?
Earnings Before Interest, Taxes, Depreciation, and Amortization
ExplanationMeasures operating performance.
#14
What is the formula to calculate the current ratio?
Current Assets / Current Liabilities
ExplanationSimple liquidity calculation.
#15
What does the term 'EBIT' stand for in finance?
Earnings Before Interest and Taxes
ExplanationOperating profitability before taxes and financing.
#16
Which financial ratio measures a company's ability to pay interest expenses on its outstanding debt?
Times Interest Earned (TIE) Ratio
ExplanationAbility to cover interest payments.
#17
What does the term 'free cash flow' represent?
The cash available after capital expenditures to reinvest in the business or distribute to shareholders
ExplanationCash for investment or distribution.
#18
Which financial ratio measures a company's ability to convert its net income into cash?
Cash Flow to Net Income Ratio
ExplanationNet income conversion efficiency.