CBC Financial Acumen & Business Finance 2

Question 1

A business coach is helping a client evaluate whether to invest in new equipment costing $50,000. The concept of 'Return on Investment (ROI)' is best described as:

Accepted Answer

(Net Profit from Investment / Cost of Investment) × 100

Answer

The time required to recover the initial investment

Answer

The interest rate paid on borrowed capital

Answer

Total revenue generated by the investment

Question 2

When advising a client on business valuation, which method estimates a company's value based on its potential future earnings, discounted to present value?

Accepted Answer

Discounted Cash Flow (DCF) Analysis

Answer

Asset-Based Valuation

Answer

Market Comparable Method

Answer

Liquidation Value Method

Question 3

A client wants to understand their 'debt-to-equity ratio.' This metric primarily indicates:

Accepted Answer

The proportion of business financing from debt versus owner equity

Answer

How quickly the company collects receivables

Answer

The company's ability to pay dividends to shareholders

Answer

How efficiently the company uses its assets to generate sales

Question 4

When coaching a client through financial forecasting, which approach involves estimating future revenues based on a percentage of projected sales?

Accepted Answer

Percentage-of-sales method

Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Activity-based costing

Question 5

A business coach explains that EBITDA is commonly used to assess a company's operational performance. What does EBITDA stand for?

Accepted Answer

Earnings Before Income, Taxes, Depreciation, and Amortization

Answer

Expenses Before Interest, Taxes, Dividends, and Assets

Answer

Earnings Before Investment, Trade, Debt, and Administration

Answer

Estimated Business Income, Tax, Dividends, and Acquisitions

Question 6

A client is concerned about pricing their services competitively while remaining profitable. The 'contribution margin' concept helps by showing:

Accepted Answer

The amount each unit sold contributes to covering fixed costs and generating profit

Answer

The total fixed costs a product must cover before generating profit

Answer

The percentage of revenue that becomes net income after all expenses

Answer

The difference between the sale price and the market average price

Question 7

When helping a client read a balance sheet, which of the following correctly represents the fundamental accounting equation?

Accepted Answer

Assets = Liabilities + Owners' Equity

Answer

Revenue = Expenses + Profit

Answer

Cash Flow = Net Income + Depreciation

Answer

Gross Profit = Net Sales − Operating Expenses