Financial Valuation Fundamentals Quiz
Test your understanding of valuation fundamentals with 14 key questions covering NPV, FCF, WACC, ratios, and methods.
#1
Which of the following is NOT a commonly used method for business valuation?
DCF (Discounted Cash Flow)
Relative Valuation
CAPM (Capital Asset Pricing Model)
Payback Period Method
#2
Which financial ratio measures a company's ability to pay off its short-term obligations?
Return on Investment (ROI)
Debt-to-Equity Ratio
Current Ratio
Earnings Per Share (EPS)
#3
Which financial statement provides information about a company's profitability?
Income Statement
Balance Sheet
Statement of Cash Flows
Statement of Retained Earnings
#4
Which of the following is a measure of a company's efficiency in utilizing its assets?
Return on Assets (ROA)
Return on Equity (ROE)
Debt-to-Equity Ratio
Earnings Per Share (EPS)
#5
Which of the following is a measure of a company's financial leverage?
Return on Equity (ROE)
Current Ratio
Debt-to-Equity Ratio
Earnings Per Share (EPS)
#6
Which financial ratio measures a company's ability to cover its interest expenses with its earnings?
Current Ratio
Debt-to-Equity Ratio
Interest Coverage Ratio
Return on Assets (ROA)
#7
What is the formula to calculate Net Present Value (NPV) of a project?
Initial Investment / Future Value
Future Value - Initial Investment
Initial Investment / Discount Rate
∑(Cash Flow / (1 + Discount Rate)^t)
#8
What does the 'Terminal Value' represent in DCF analysis?
The value of an investment at the beginning of its life cycle
The value of an investment at the end of its forecast period
The average value of an investment over its life cycle
The value of an investment after it reaches maturity
#9
What is the formula to calculate Free Cash Flow (FCF)?
Operating Cash Flow - Capital Expenditures
Net Income + Depreciation
EBIT (Earnings Before Interest and Taxes) - Taxes
Total Revenue - Total Expenses
#10
What does the 'Weighted Average Cost of Capital (WACC)' represent?
The average cost of debt and equity financing
The total cost of capital for a company
The average return expected by investors
The average cost of preferred stock
#11
Which valuation method is commonly used to value mature, stable companies?
DCF (Discounted Cash Flow)
Comparable Company Analysis
Asset-based Valuation
Liquidation Valuation
#12
What is the formula to calculate the Price-Earnings (P/E) ratio?
Market Price per Share / Earnings per Share (EPS)
Earnings per Share (EPS) / Market Price per Share
Total Earnings / Total Shares Outstanding
Total Market Capitalization / Total Earnings
#13
What does the 'Discount Rate' represent in financial valuation?
The interest rate at which future cash flows are discounted
The interest rate at which present cash flows are discounted
The rate at which dividends are paid to shareholders
The rate at which the inflation affects cash flows
#14
What does the 'Intrinsic Value' represent in financial valuation?
The market value of a company's equity
The value of a company's assets
The true or inherent value of an investment
The book value of a company's equity
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