Financial Acumen & Business Finance Flashcards
7 cards from real CBC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Acumen & Business Finance flashcards as text
A business coach is helping a client understand their company's financial health. Which financial statement shows the company's revenues, expenses, and net profit over a specific period?
Answer: Income Statement
The Income Statement (also called Profit & Loss Statement) reports revenues, expenses, and net income over a defined accounting period.
When coaching a small business owner, you explain that 'gross profit margin' is best calculated as:
Answer: (Revenue − Cost of Goods Sold) / Revenue × 100
Gross profit margin equals revenue minus cost of goods sold divided by revenue, showing how efficiently a company produces its goods or services.
A client's business has a current ratio of 0.8. As their business coach, what should you communicate about this metric?
Answer: The business may struggle to meet short-term obligations
A current ratio below 1.0 indicates current liabilities exceed current assets, signaling potential difficulty paying short-term debts as they come due.
Which of the following best describes 'working capital' in a business context?
Answer: Current assets minus current liabilities
Working capital is calculated as current assets minus current liabilities and measures a company's short-term liquidity and operational efficiency.
A business coach helping a client with pricing strategy should explain that 'break-even analysis' determines:
Answer: The point at which total revenue equals total costs, resulting in neither profit nor loss
Break-even analysis identifies the sales volume at which total revenues equal total costs, meaning the business covers all expenses with zero profit or loss.
When coaching an entrepreneur on cash flow management, which statement is most accurate?
Answer: A business can be profitable yet still experience cash flow problems
A business can show accounting profit yet still face cash shortages due to timing differences between when revenue is earned and when cash is actually received.
A client asks about the difference between fixed and variable costs. Which of the following is an example of a variable cost?
Answer: Raw materials used per unit produced
Raw materials consumed per unit produced are variable costs because they fluctuate directly in proportion to production or sales volume.