60 Questions
What is a fundamental ratio of financial analysis that helps assess the capacity of repayment of a company?
Capacity of repayment
Which ratio defines the liquidity of the balance sheet by ensuring that assets within one year exceed liabilities within one year?
Current ratio
For long term lenders, why is Free Cash Flow considered an essential element?
To assess the capacity of repayment
What should the Current ratio ideally be to indicate good liquidity on the balance sheet?
Greater than 1
What does the Ratio of reduced liquidity consider in its calculation?
Availability (including marketable securities)
What indicates that a company is solvent according to the text?
Sufficient real asset to pay debts
What type of income is considered 'current income' in the text?
Operational income
What is the main characteristic of exceptional results mentioned in the text?
They fluctuate and cannot be used for forecasting
Which financial elements are considered part of the 'current' according to the text?
Debts used to finance assets generating turnover
What does the 'Ratio of variation of Turnover' allow to analyze according to the text?
Development of the activity
What does the 'Ratio of variation of Added Value' compare according to the text?
Sale price and purchasing cost
What type of operations are included in the 'Autonomous balance' as defined in the text?
Management operations
What is calculated by subtracting the Cost of Purchased sold goods from Sales of goods?
Gross Margin
Which financial metric represents Earning Before Interest, Taxes, Depreciation, and Amortization?
Earning Before Interest Taxes Depreciation and Amortization (EBITDA)
What is calculated as Sold production + Stored production + Fixed production?
Production of the exercise
Which metric is calculated by deducting Taxes and Staff expenses from Added Value?
Earning Before Interest Taxes Depreciation and Amortization (EBITDA)
What is determined by adding Financial revenues to Earning Before Interest and Taxes (EBIT)?
Current Income Before Tax (RCAI)
In which types of companies is the Gross Margin specifically calculated?
In both commercial and industrial companies that insure a trade activity
What is the formula for calculating the Working Capital Need (WCN)?
Inventories + short term receivables - short term debts
What does a negative Working Capital Need indicate?
Resource release
What are some factors that influence the evolution of Working Capital Need?
Level of inventory, receivables, debts, and deadlines
How is Net Cash related to Working Capital and Working Capital Need?
Net Cash = Working Capital + Working Capital Need
What does the analysis of big financial equilibrium involve?
Time-varying comparison of Working Capital, Working Capital Need, and Net Cash evolutions
What does Negative working capital do in terms of resources?
Absorbs resources
What does the concept of profitability refer to?
The company's capacity to pay invested capitals over time
How is margin different from profitability?
Margin measures the relation between a result and volume of activity, while profitability is the relation between income and activity.
What does ROCE represent in terms of profitability?
Return on Overall Capital Employed
Which financial indicator serves as a performance measure for shareholders?
ROE
What is included in economic assets according to the text?
Net fixed assets, Working Capital Need, and Availabilities
How is economic profitability different from financial profitability?
Economic profitability considers return on all capital employed, financial profitability focuses only on equity.
What does the Added Value (VA) measure in a company?
Wealth created during the exercise
In financial analysis, what does EBITDA represent?
Residual resource generated by exploitation
What does the Earning Before Interest Taxes Depreciation and Amortization (EBITDA) intend to pay?
Invested capitals and production capacity maintenance
How is the Gross Domestic Product (GDP) of a country determined?
By summing the added values of all economic agents
What does the EARNING BEFORE INTEREST TAXES DEPRECIATION and AMORTIZATION (EBITDA) represent?
$20 + $15 - $5
Which financial metric calculates the surplus of wealth created by a company?
$10 + $20 - $5
What does a negative Working Capital Need indicate?
The company has excess resources tied up in working capital.
Which of the following factors influences the evolution of Working Capital Need?
Level of debts
How is Net Cash related to Working Capital Need?
Net Cash is inversely proportional to Working Capital Need.
What does the analysis of big financial equilibrium involve?
Studying the time-varying comparison of Working Capital, WCN, and Net Cash evolutions.
How is economic profitability different from financial profitability?
Economic profitability incorporates opportunity costs, while financial profitability does not.
What is the formula for calculating the Working Capital Need (WCN)?
$Inventories - Short-term receivables + Short-term debts$
What does the Equity ratio represent in financial analysis?
Equity divided by total liabilities
When is a company considered 'under capitalized' based on the capitalization ratio?
When the ratio is lower than 33%
What does the Working Capital (WC) measure in a company?
Capacity to cover investment cycle needs
Why is it essential for current assets to have stable financing?
To cover the needs for the investment cycle
In a functional balance sheet, how are resources and uses typically estimated?
At the value of origin (gross value)
What characterizes a company that is 'under capitalized' according to the text?
'Ratio of general solvency' above 33%
What does the ratio 'Cover of stable uses' aim to measure?
Financial safety margin in terms of profitability
How is the increase of fixed assets typically financed according to the text?
Under-investment and disposal of assets
What does a positive Working Capital indicate about a company according to the text?
Adequate resources absorption
In the context of financial deleveraging, what does 'repayment by anticipation' refer to?
Paying off existing financial debts before the due date
What does a decrease in stable resources usually imply for a company's working capital?
Decrease in working capital
How is the 'Ratio of reduced liquidity' calculated based on the information provided?
$\frac{Working,Capital}{360,days}$
What is the formula for calculating Return on Capital Employed (ROCE) according to the text?
Economic Income * (1 – Corporate Income rate) / Economic assets * 100
What is the impact of increasing the part of debts in invested capital on the relationship between ROCE and ROE?
Increases the gap between ROCE and ROE
What does the leverage effect refer to in financial analysis?
Difference between the profitability of equity (ROE) and the economic profitability (ROCE)
In financial terms, when does ROE equal ROCE with a 'sledgehammer blow' effect?
When ROE is less than ROCE
What causes a decrease in financial profitability according to the text?
Increase in the part of debts in invested capital
What is the leverage effect in financial analysis primarily attributed to?
Debts of the company on equity profitability
Test your knowledge on liquidity, solvency, and profitability ratios, as well as concepts such as gross margin, added value, EBITDA, RCAI, net income, and more. This quiz covers intermediate balances of management and financial results analysis.
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