15 Questions
Which of the following best describes sensitivity analysis?
A method for assessing the impact of changes in calculation assumptions on NPV
What is an annuity?
A finite stream of payments over a set number of periods
What is a growing annuity?
A stream of payments that increases over time
What does the ROE indicate?
Profitability
What are fixed costs defined as?
Independent of production
What is the purpose of the annuity factor?
To ease present value computations
What does the receivables turnover measure?
Efficiency
What does the inventory turnover measure?
Efficiency
What is the profitability index?
A ratio of present value of future cash flow normalized by initial investment
What is a perpetuity?
A constant cash flow without an end
What does the equity multiplier measure?
Financial leverage
What is financial leverage?
The amount of debt a company has in its capital structure
Which of the following is included in a typical loan amortization plan?
Interest and principal payments
What can MPV be applied to?
Any type of cash flow
What is a real option in decision making?
A flexible decision making approach
Test your knowledge on finance concepts with this quiz! Topics covered include sensitivity analysis, net present value (NPV) computation, annuity, and growing annuity. Practice identifying and defining these key terms to improve your financial literacy.
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