Sophia
Principles of Finance
Milestone 1
1
For which company can trend analysis be most useful?
A ride-sharing company whose business model has been rapidly adapting to market conditions
An insurance company that has recently been subject to new accounting laws
An established hotel company that has made very few changes to its business model
A manufacturing company that has recently expanded into mining as well
CONCEPT
Using Financial Ratios for Analysis
2
Xander is looking for ways to reduce his non-operating expenses to improve his company's
overall financial performance, so he consults his most recent income statement.
Which of the following should he focus on?
Wages
,Amortization
Income taxes
Depreciation
CONCEPT
The Income Statement
3
If Company A has a lower debt ratio than Company B, then Company A is likely to have
__________ than Company B.
a greater ability to borrow
a higher level of financial risk
more total assets
less financial flexibility
, CONCEPT
Debt Management Ratios
4
Thomas is concerned about his company's ability to pay off its short-term debts.
If he wants to know more about his company's liquidity, what should he do?
Calculate his total liabilities
Calculate his total assets
Calculate his net working capital
Calculate his debt to equity ratio
CONCEPT
The Balance Sheet
5
If equity is $2 million and total revenue is $1.3 million, then ROE is __________.
incalculable without net profit data
Principles of Finance
Milestone 1
1
For which company can trend analysis be most useful?
A ride-sharing company whose business model has been rapidly adapting to market conditions
An insurance company that has recently been subject to new accounting laws
An established hotel company that has made very few changes to its business model
A manufacturing company that has recently expanded into mining as well
CONCEPT
Using Financial Ratios for Analysis
2
Xander is looking for ways to reduce his non-operating expenses to improve his company's
overall financial performance, so he consults his most recent income statement.
Which of the following should he focus on?
Wages
,Amortization
Income taxes
Depreciation
CONCEPT
The Income Statement
3
If Company A has a lower debt ratio than Company B, then Company A is likely to have
__________ than Company B.
a greater ability to borrow
a higher level of financial risk
more total assets
less financial flexibility
, CONCEPT
Debt Management Ratios
4
Thomas is concerned about his company's ability to pay off its short-term debts.
If he wants to know more about his company's liquidity, what should he do?
Calculate his total liabilities
Calculate his total assets
Calculate his net working capital
Calculate his debt to equity ratio
CONCEPT
The Balance Sheet
5
If equity is $2 million and total revenue is $1.3 million, then ROE is __________.
incalculable without net profit data
