Take this quick assessment to gauge your understanding of business finance.
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Question 1 of 15
Which financial statement provides information about a company's revenues, expenses, and net income?
Balance sheet
Cash flow statement
Income statement
Statement of retained earnings
Question 2 of 15
Which financial statement provides information about capital expenditures?
Question 3 of 15
The financial statement that reports a company's assets, liabilities, and equity is the:
Question 4 of 15
What is the accounting formula?
Assets = Liabilities - Equity
Assets + Equity = Liabilities
Asset + Liabilities = Equity
Assets = Liabilities + Equity
Question 5 of 15
Net income on the income statement is calculated as:
Revenue minus expenses
Assets minus liabilities
Cash inflows minus cash outflows
Revenue minus cost of goods sold
Question 6 of 15
In finance, liquidity refers to:
The ability of a company to generate profit from its assets
The total value of a company's assets
The extent to which a company's assets exceed its liabilities
The ability of a company to meet its short-term obligations
Question 7 of 15
The purpose of financial ratios is to:
Evaluate a company's cash flows
Assess a company's liquidity, profitability, and financial stability
Calculate a company's return on investment
Determine a company's weighted average cost of capital
Question 8 of 15
The financial ratio that measures a company's ability to meet its short-term obligations is the:
Debt-to-equity ratio
Current ratio
Gross profit margin
Return on assets
Question 9 of 15
Free cash flow is calculated as:
Operating cash flow minus capital expeditures
Net income plus depreciation and amortization
Operating cash flow plus financing cash flow
Earnings before interest and taxes (EBIT) minus taxes
Question 10 of 15
What does a positive NPV indicate?
The investment will generate more cash inflows than outflows
The investment will not yield any returns
The investment has high risk and uncertainty
The investment is not financially viable
Question 11 of 15
Capital budgeting is the process of:
Assessing a company's financial performance over time
Calculating a company's net present value (NPV)
Evaluating investment opportunities and making decisions about long-term projects
Determining a company's cost of capital
Question 12 of 15
How is intrinsic value calculated for a stock?
By analyzing the historical performance of the stock
By assessing the company's brand reputation and customer loyalty
By discounting the projected future cash flows of the stock
By multiplying its P/E ratio by its market capitalization
Question 13 of 15
How does expansionary monetary policy impact the economy?
Increases interest rates
Reduces government spending
Encourages borrowing and spending
Decreases money supply
Question 14 of 15
Return on investment (ROI) is calculated as:
Net income divided by the cost of investment
Cash inflows divided by the cost of investment
Gross margin divided by the equity portion of an investment
EBITDA divided by the equity portion of an investment
Question 15 of 15
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