Peregrine Exam – Finance Questions & Answers 100% Correct!!

RETAINED EARNINGS Begin retained earnings + Profit/losses- Dividents - ANSWERAn amount earned by a corporation and not yet distributed to stockholders. Inventory turnover ratio COGS/ Average Inventory - ANSWERratio showing how many times a company has sold and replaced inventory during a given period. ROA - ANSWERmetric that measures the profitability of a business in relation to its total assets. This ratio indicates how well a company is performing by comparing the profit (net income) it's generating to the capital it's invested in assets. INCOME STATEMENTS - ANSWERA report summarizing a firm's revenues, expenses, and profits during a reporting period, generally a quarter or a year. OPERATING MARGINS Equal to operating income divided by revenue - ANSWERa profitability ratio measuring revenue after covering operating and non-operating expenses of a business. Also referred to as return on sales, the operating income is the basis of how much of the generated sales is left when all operating expenses are paid off. Reporting - ANSWERthe financial results of an organization are released to the public. The key function of the controller. current ratio = current assest / current liabilities - ANSWERmeasures the capability of a business to meet its short-term obligations that are due within a year. Free Cash Flow - ANSWERnet cash provided by operating activities - capital expenditures - cash dividends RATIOS IN DECISION-MAKING - ANSWERFinancial ratio analysis is aimed to assess the financial performance and determine the financial position of an organization through its profitability, liquidity, activity, leverage and other relevant indicators. INTEREST INCOME AND CAPITAL GAINS - ANSWERtax is paid on income that derives from the sale or exchange of an asset, such as a stock or property that's categorized as a capital asset. PROFIT MARGINS - ANSWERratio of a company's profit divided by its revenue. It's always expressed as a percentage. It tells you how well a company uses its income.