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EBITDA and Working Capital Quiz

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Questions and Answers

Which of the following best defines EBITDA?

Net income plus interest, taxes, depreciation, and amortization (correct)

Net income minus interest, taxes, depreciation, and amortization

Gross profit minus operating expenses

Revenue minus cost of goods sold

What is the formula for calculating working capital?

Revenue - cost of goods sold

Net income / total assets

Current assets - current liabilities (correct)

Total assets - total liabilities

Which of the following is a common use of EBITDA?

To assess a company's debt levels

To calculate a company's net income

To determine a company's revenue

To evaluate a company's operating performance (correct)

Study Notes

Financial Metrics

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a financial metric that measures a company's profitability, excluding non-operating items.

Working Capital

Working capital is the difference between a company's current assets and current liabilities, calculated using the formula: Working Capital = Current Assets - Current Liabilities.

EBITDA Use Cases

A common use of EBITDA is to compare the financial performance of companies with different capital structures, taxation, and depreciation policies, as it eliminates these variables.

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Description

Test your knowledge on EBITDA and working capital with this comprehensive multiple choice quiz! Covering 50 questions, this quiz will challenge your understanding of EBITDA - its definition, calculation, and common uses - as well as working capital formula. Sharpen your financial skills and see how well you perform in this quiz!