Credit

What does a comparison of a business’s debt versus income indicate?

• The business's profitability

• The business's liquidity

• The business's net worth

• The business's debt management

What does a broader indication of liquidity include?

• Net income

• Cash flow

• Inventory

• Accounts receivable

What does the compensation an entrepreneur receives for the assumption of risk in a business venture refer to?

• Profit margin

• Equity stake

• Return on investment

• Risk premium

What does it mean if a business can quickly collect cash owed by customers?

• Good inventory management

• Strong credit control

• Efficient cash flow

• High liquidity

What does it mean to allow businesses to make financial estimates?

• Auditing

• Investing

• Forecasting

• Budgeting

What is a bond in the context of business financing?

• A type of equity that gives stock ownership

• A certificate of debt issued to manage payroll

• A method to secure physical assets

• A form of debt financing where a business borrows money from investors and repays with interest

A person who agrees to pay off a loan if the original party does not pay

• Collateral

• Character

• Character

• Cosigner

When a business decides to pay a loan off early due to a cash surplus, how is this business using financialinformation?

• to manage debt

• to increase sales

• to create budgets

• to make purchases

What is the primary purpose of a business's cash flow statement?

• To show the company's profitability

• To provide a snapshot of the company's assets and liabilities

• To track the inflow and outflow of cash within the business

• To outline the company's long-term financial strategy

Which financial metric is used to assess a company's ability to meet its short-term obligations?

• Net profit margin

• Debt-to-equity ratio

• Current ratio

• Return on equity