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FIN 320F Exam 1 Working Words (Duvic) Questions and Answers Rated A+ $9.99   Add to cart

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FIN 320F Exam 1 Working Words (Duvic) Questions and Answers Rated A+

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FIN 320F Exam 1 Working Words (Duvic) Questions and Answers Rated A+ What is the function of financial ratios in financial analysis? To assess a company’s performance and financial health by comparing various financial metrics. What does "net present value" (NPV) measure? The value of...

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  • September 10, 2024
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  • FIN 320F Exm 1 Working Words
  • FIN 320F Exm 1 Working Words
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FIN 320F Exam 1 Working Words (Duvic)
Questions and Answers Rated A+

What is the function of financial ratios in financial analysis?


✔✔ To assess a company’s performance and financial health by comparing various financial

metrics.




What does "net present value" (NPV) measure?


✔✔ The value of an investment's future cash flows discounted back to their present value, minus

the initial investment cost.




How does "return on assets" (ROA) reflect a company's efficiency?


✔✔ By showing how effectively a company uses its assets to generate profit.




What is the significance of "earnings before interest and taxes" (EBIT)?


✔✔ It measures a company’s profitability from core operations before considering interest and

tax expenses.




How is "free cash flow" (FCF) calculated?


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,✔✔ By subtracting capital expenditures from operating cash flow.




What is "financial leverage" and how is it used?


✔✔ Financial leverage refers to using borrowed funds to increase the potential return on

investment.




What does "inventory turnover ratio" indicate?


✔✔ How quickly a company sells its inventory within a given period.




How does "price-to-earnings" (P/E) ratio provide insight into a company's stock valuation?


✔✔ It compares the company's current share price to its earnings per share, indicating how much

investors are willing to pay per dollar of earnings.




What does "interest coverage ratio" measure?


✔✔ The company’s ability to meet its interest payments on outstanding debt, calculated by

dividing EBIT by interest expenses.




How is "operating margin" useful in assessing business performance?



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, ✔✔ It measures the percentage of revenue that remains after covering operating expenses,

reflecting operational efficiency.




What is the purpose of conducting a break-even analysis?


✔✔ To determine the level of sales needed to cover all fixed and variable costs, resulting in

neither profit nor loss.




How does "current ratio" help in evaluating a company’s financial health?


✔✔ It assesses the company’s ability to pay short-term liabilities with short-term assets.




What role does "depreciation" play in financial statements?


✔✔ Depreciation allocates the cost of a tangible asset over its useful life, affecting net income

and asset values.




What is meant by "working capital management"?


✔✔ It involves managing a company's short-term assets and liabilities to ensure operational

efficiency and liquidity.




How does "profit margin" reflect a company's profitability?

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