HFA Test 3 2025 Questions and
Answers 100% Pass
Intrinsic value - ✔✔the "true" value of something
Market value - ✔✔the price/value at which an asset is trading in the open market
Market cap - ✔✔market value of a company, equals the price per share of stock times
the number of shares of stock that exist
Revenue - ✔✔= sales = total $ a company brings in through selling goods and services
Income - ✔✔= net income = earnings = profit
Expenses - ✔✔= costs
Fixed costs - ✔✔costs a company incurs regardless of how much they produce/sell
Variable costs - ✔✔costs that depend on production/sales, often expressed as a cost per
unit
Operating income/costs - ✔✔income or costs associated with the operations of the
business...doesn't include investments in other companies, taxes, interest payments
Financing expense - ✔✔= interest expense (on debt)
Assets - ✔✔assets are things of value that the company owns (such as cash, inventory,
cash the company is owed, etc
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, Liabilites - ✔✔stuff a company owes...debt, agreements to provide services, etc
Shareholder's equity - ✔✔= book value of a company = assets minus liabilities; value of
company according to its balance sheet
Current assets - ✔✔cash and cash equivalents + assets that are expected to turn into
cash within a year (inventory, cash the company is owed within a year)
Liquid assets - ✔✔cash + cash equivalents + assets that can be sold quickly and easily
(includes "marketable securities," does not include inventory)
Current liabilities - ✔✔liabilities due to be paid off within a year
Intangible assets - ✔✔assets like brands or patents that are not physical, debt owed, or
cash
Dividend - ✔✔a periodic cash payment to shareholders of a company
Leverage - ✔✔= a measure of risk if things go bad and conversely, upside if things go
well
Operating leverage - ✔✔leverage arising from the operating cost structure of the
business...higher fixed costs relative to variable costs = more operating leverage.
Degree of operating leverage - ✔✔= % change in operating income/% change in units
sold
Financial leverage - ✔✔arises from use of debt; more heavily indebted companies
(relative to the size of the company) have more financial leverage.
Degree of financial leverage - ✔✔= % change in net income/% change in operating
income
Total leverage - ✔✔combines operating leverage and financial leverage.
COPYRIGHT © 2025 BY GRACE AMELIA, ALL RIGHTS RESERVED 2
Answers 100% Pass
Intrinsic value - ✔✔the "true" value of something
Market value - ✔✔the price/value at which an asset is trading in the open market
Market cap - ✔✔market value of a company, equals the price per share of stock times
the number of shares of stock that exist
Revenue - ✔✔= sales = total $ a company brings in through selling goods and services
Income - ✔✔= net income = earnings = profit
Expenses - ✔✔= costs
Fixed costs - ✔✔costs a company incurs regardless of how much they produce/sell
Variable costs - ✔✔costs that depend on production/sales, often expressed as a cost per
unit
Operating income/costs - ✔✔income or costs associated with the operations of the
business...doesn't include investments in other companies, taxes, interest payments
Financing expense - ✔✔= interest expense (on debt)
Assets - ✔✔assets are things of value that the company owns (such as cash, inventory,
cash the company is owed, etc
COPYRIGHT © 2025 BY GRACE AMELIA, ALL RIGHTS RESERVED 1
, Liabilites - ✔✔stuff a company owes...debt, agreements to provide services, etc
Shareholder's equity - ✔✔= book value of a company = assets minus liabilities; value of
company according to its balance sheet
Current assets - ✔✔cash and cash equivalents + assets that are expected to turn into
cash within a year (inventory, cash the company is owed within a year)
Liquid assets - ✔✔cash + cash equivalents + assets that can be sold quickly and easily
(includes "marketable securities," does not include inventory)
Current liabilities - ✔✔liabilities due to be paid off within a year
Intangible assets - ✔✔assets like brands or patents that are not physical, debt owed, or
cash
Dividend - ✔✔a periodic cash payment to shareholders of a company
Leverage - ✔✔= a measure of risk if things go bad and conversely, upside if things go
well
Operating leverage - ✔✔leverage arising from the operating cost structure of the
business...higher fixed costs relative to variable costs = more operating leverage.
Degree of operating leverage - ✔✔= % change in operating income/% change in units
sold
Financial leverage - ✔✔arises from use of debt; more heavily indebted companies
(relative to the size of the company) have more financial leverage.
Degree of financial leverage - ✔✔= % change in net income/% change in operating
income
Total leverage - ✔✔combines operating leverage and financial leverage.
COPYRIGHT © 2025 BY GRACE AMELIA, ALL RIGHTS RESERVED 2
