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 guiding a client through budget creation. Which budgeting approach requires managers to justify every expense from zero each period, regardless of prior budgets?
Answer: Zero-based budgeting
Zero-based budgeting starts each budget period from a zero baseline, requiring every expense to be re-justified rather than simply adjusting prior period figures.
A client's accounts receivable days outstanding (DSO) has increased from 30 to 55 days. As their coach, you would flag this as a concern because:
Answer: The company is collecting cash from customers more slowly, potentially straining cash flow
An increasing DSO means it is taking longer to collect payment from customers, which can strain cash flow even if sales and profits are growing.
When a business coach helps a client understand the 'time value of money,' the core principle being applied is:
Answer: A dollar available today is worth more than a dollar available in the future
The time value of money principle holds that money available now is worth more than the same amount in the future because it can be invested to earn a return.
A client is evaluating whether to lease or buy equipment. Which financial concept most directly helps in comparing these two options over time?
Answer: Net present value (NPV) analysis
Net present value analysis discounts future cash flows to today's value, allowing a direct comparison of the true financial cost of leasing versus buying.
A business coach notices a client's operating expense ratio is rising each quarter. This metric is calculated as:
Answer: Operating Expenses / Net Revenue × 100
The operating expense ratio is calculated by dividing total operating expenses by net revenue, indicating what percentage of revenue is consumed by operating costs.
When coaching a startup founder on funding options, which of the following describes 'bootstrapping' as a financing strategy?
Answer: Funding business growth primarily through personal savings and operating revenue
Bootstrapping means funding and growing a business using personal savings and reinvested revenues, avoiding external investors or debt financing.
A client asks about the difference between a 'profit center' and a 'cost center' within their organization. As their business coach, you correctly explain that:
Answer: A profit center generates revenue while a cost center only incurs expenses without direct revenue generation
A profit center is a business unit that generates revenue and its own profits, while a cost center incurs costs to support the organization but does not directly produce revenue.