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Peregrine Exam Day 4 Questions and Verified Answers| 100% Correct| Grade A+
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Peregrine Exam Day 4 Questions and Verified Answers| 100% Correct| Grade A+
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Peregrine Exam Day 4 Questions and VerifiedAnswers| 100% Correct| Grade A+
Current Ratio - ✔✔current ratio is a liquidity ratio that measures a companies ability to pay short-term
obligations or those due within one year.
current ratio compares - ✔✔current assets to current liabilities
Also referred to as working capital - ✔✔current ratio
Weaknesses of the current ratio - ✔✔difficulty of comparing the measure across industry groups,
overgeneralization of specific asset and liability balances, and the lack of trending information.
Free Cash Flow - ✔✔represents the cash available for the company to repay creditors or pay
dividends and interest to investors
FCF reconciles - ✔✔net income by adjusting for non-cash expenses, changes in working capital
and capital expenditures
FCF can reveal - ✔✔problems in the fundamentals before they arise on the income statement
Free Cash Flow - ✔✔net operating profit after taxes (NOPAT), add in depreciation expense, then
subtract money set aside for capital expenditures and any need for increasing working capital
ratio analysis - ✔✔the calculation and interpretation of a financial ratio
, interest income - ✔✔the interest earned on money loaned
Savings accounts and certificates of deposit are examples of what? - ✔✔Interest income
revenue - expenses - ✔✔net interest income
capital gain - ✔✔the difference between a higher selling price and a lower purchase price, resulting in a
financial gain for the seller
Capital gain might be - ✔✔long or short term
profit margin - ✔✔gauges the degree to which a company or business activity makes money,
divide income by revenues
Expressed as a percentage - ✔✔profit margin indicates how many cents of profit has been generated
for each dollar of sale
Several types of profit margin - ✔✔the most significant and commonly used is net profit margin, a
companies bottom line after all other expenses, including taxes and one-off oddities have been removed
from revenue.
Profit margins are used by - ✔✔creditors, investors, businesses themselves as indicators of a
company's financial health, management's skill and growth potential
Profit margins vary by - ✔✔industry sector, care should be taken when comparing figures for
different businesses
Gross Profit Margin - ✔✔(net sales - COGS) / net sales
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