HBX Core Final Exam
1. Is a calculation of the present values of all the cash inflows and outflows of
a project or investment.
Excel formula =NPV(E4,B3:B12)+B2
Remember,for NPV you have to manually add the negative outflow from time
zero related to the initial investment.: Net Present Value
2. Asset and expense accounts increase with debit and decrease with credit.-
: Asset/Expense Accounts
3. Shows a company's financial performance, because it shows the accumu-
lation of all nominal accounts over a period of time.: Income Statement
4. Sales Revenue minus COGS.: Gross Profit
5. Credit Purchases/Average Accounts Payable Balance.: Accounts Payable
Turnover
6. The discount rate that sets the net present value (NPV) of a project equal to
zero. The IRR allows us to find the percentage rate that would be earned for a
given set of cash flows.: Internal Rate of Return (IRR)
7. Gross Profit/Revenue =Gross Profit Margin: Gross Profit Margin Calculation
8. Average Total Assets/Average Equity.
Suggested Formula =Average (B11,D5)/Average (Sum(B16:B18),D8).: Lever-
age Ratio Calculation
9. It is calculated by multiplying the annual payment by the present value of
an annuity factor.
$18,000*6.71008=$120,781: Present Value Calculation
10. The return that a business generates during a period on equity invested in
the business by the owners of the business.
Measured in DuPont Framework.: Return on Equity (ROE)
11. The return or profit received as a result of investing funds.
Not measured by the DuPont Framework.: Return on Investment (ROI)
12. The number of days between when a company pays for inventory purchas-
es and when a company collects from customers.
Not measured by the DuPont Framework.: Cash Conversion Cycle (CCC)
13. The number of times a company can cover its interest expense only using
its earnings before interest and tax.
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, HBX Core Final Exam
Not part of the DuPont Framework.: Interest Coverage Ratio
14. Arises when taxable income exceeds Income Before Taxes due to a tem-
porary timing difference.
When a deferred Tax Asset arises it means a company is recognizing Tax
Expense now on an amount of income that will be reflected in the financial
records later.: Deferred Tax Asset
15. The amount shown on the Income Statement after all expenses have been
taken away from the revenue for the period but before any tax expense for the
period. May also be referred to as Pretax Profit.: Income Before Taxes
16. (Net Income/Sales ) measures the ability of a company to make a profit
relative to revenue generated during a period. A Profit Margin of 19% tells us
that for every $100 in sales, $19 ended up in Net Income.: Profit Margin
17. Profit Margin (Net Income/Sales) measures the ability of a company to
make a profit relative to revenue generated during a period.
In Excel Net Income/Revenue.: Profit Margin
18. 365/AR Turnover =365/(Credit Sales/ Average AR Balance): Average Collec-
tion Period
19. The current ratio is a measure of a business' ability to pay its short term
obligations.: Current Ratio
20. measures the ability of a company to use its quick assets to pay off its
short-term debts.: Quick Ratio
21. measures a company's leverage, not ability to pay off its debts.: Debt to
Equity Ratio
22. A gain, an increase in operating assets, and a decrease in operating current
liabilities would all need to be subtracted from net income in order to convert
net income into operating cash flow when using the indirect method to create
the Statement of Cash Flows.: Indirect Method to create the Statement of Cash
Flows
23. A method for calculating the terminal value of an indefinite stream of cash
flows. The calculation gives the present value of infinite cash flows by dividing
the cash flow in the final year of our projection by the difference between the
discount rate and the growth rate.: Gordon Growth Model
24. is a measure of how long it takes a business from the time it has to pay for
inventory from its suppliers until it collects cash from its customers.
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1. Is a calculation of the present values of all the cash inflows and outflows of
a project or investment.
Excel formula =NPV(E4,B3:B12)+B2
Remember,for NPV you have to manually add the negative outflow from time
zero related to the initial investment.: Net Present Value
2. Asset and expense accounts increase with debit and decrease with credit.-
: Asset/Expense Accounts
3. Shows a company's financial performance, because it shows the accumu-
lation of all nominal accounts over a period of time.: Income Statement
4. Sales Revenue minus COGS.: Gross Profit
5. Credit Purchases/Average Accounts Payable Balance.: Accounts Payable
Turnover
6. The discount rate that sets the net present value (NPV) of a project equal to
zero. The IRR allows us to find the percentage rate that would be earned for a
given set of cash flows.: Internal Rate of Return (IRR)
7. Gross Profit/Revenue =Gross Profit Margin: Gross Profit Margin Calculation
8. Average Total Assets/Average Equity.
Suggested Formula =Average (B11,D5)/Average (Sum(B16:B18),D8).: Lever-
age Ratio Calculation
9. It is calculated by multiplying the annual payment by the present value of
an annuity factor.
$18,000*6.71008=$120,781: Present Value Calculation
10. The return that a business generates during a period on equity invested in
the business by the owners of the business.
Measured in DuPont Framework.: Return on Equity (ROE)
11. The return or profit received as a result of investing funds.
Not measured by the DuPont Framework.: Return on Investment (ROI)
12. The number of days between when a company pays for inventory purchas-
es and when a company collects from customers.
Not measured by the DuPont Framework.: Cash Conversion Cycle (CCC)
13. The number of times a company can cover its interest expense only using
its earnings before interest and tax.
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, HBX Core Final Exam
Not part of the DuPont Framework.: Interest Coverage Ratio
14. Arises when taxable income exceeds Income Before Taxes due to a tem-
porary timing difference.
When a deferred Tax Asset arises it means a company is recognizing Tax
Expense now on an amount of income that will be reflected in the financial
records later.: Deferred Tax Asset
15. The amount shown on the Income Statement after all expenses have been
taken away from the revenue for the period but before any tax expense for the
period. May also be referred to as Pretax Profit.: Income Before Taxes
16. (Net Income/Sales ) measures the ability of a company to make a profit
relative to revenue generated during a period. A Profit Margin of 19% tells us
that for every $100 in sales, $19 ended up in Net Income.: Profit Margin
17. Profit Margin (Net Income/Sales) measures the ability of a company to
make a profit relative to revenue generated during a period.
In Excel Net Income/Revenue.: Profit Margin
18. 365/AR Turnover =365/(Credit Sales/ Average AR Balance): Average Collec-
tion Period
19. The current ratio is a measure of a business' ability to pay its short term
obligations.: Current Ratio
20. measures the ability of a company to use its quick assets to pay off its
short-term debts.: Quick Ratio
21. measures a company's leverage, not ability to pay off its debts.: Debt to
Equity Ratio
22. A gain, an increase in operating assets, and a decrease in operating current
liabilities would all need to be subtracted from net income in order to convert
net income into operating cash flow when using the indirect method to create
the Statement of Cash Flows.: Indirect Method to create the Statement of Cash
Flows
23. A method for calculating the terminal value of an indefinite stream of cash
flows. The calculation gives the present value of infinite cash flows by dividing
the cash flow in the final year of our projection by the difference between the
discount rate and the growth rate.: Gordon Growth Model
24. is a measure of how long it takes a business from the time it has to pay for
inventory from its suppliers until it collects cash from its customers.
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