Financial Valuation Fundamentals Quiz

CAPM is a model for calculating the expected return on an investment, not a valuation method.

Current Ratio assesses a company's ability to cover its short-term liabilities with its short-term assets.

The Income Statement shows a company's revenues, expenses, and profits over a specific period.

ROA indicates the efficiency of a company in generating earnings from its assets.

Debt-to-Equity Ratio assesses the proportion of a company's financing that comes from debt.

Interest Coverage Ratio indicates a company's ability to meet interest payments with its operating profits.

NPV calculates the present value of future cash flows by discounting them at a specified rate.

Terminal Value is the future value of a project beyond the explicit forecast period in Discounted Cash Flow analysis.

FCF represents the cash generated by a business available for distribution to investors after maintaining or expanding its asset base.

WACC is the average rate of return a company is expected to provide to all its investors, including equity and debt holders.

Comparable Company Analysis compares a company's valuation metrics to those of similar publicly traded companies.

P/E ratio measures the market value of a company's shares relative to its earnings per share.

Discount Rate is the rate used to determine the present value of future cash flows in valuation.

Intrinsic Value is the perceived or calculated value of an investment based on fundamental analysis.