HBX Core Financial Accounting Exam | Verified Exam Questions and Answers | Latest Updated Study Material 2026

HBX Core Financial Accounting Exam | Verified Exam Questions and
Answers | Latest Updated Study Material 2026

Question:

Asset Turnover
Answer:

sales/average assets

Question:

Converting net income to operating cash flow
Answer:

An increase in
operating current assets is subtracted from net income.

Question:

A decrease in operating current assets is added to net income.
An increase in operating current liabilities is added to net income.
A decrease in operating current liabilities is subtracted from net income.
Inventory Turnover
Answer:

COGS/average income

Question:

Days Inventory
Answer:

365/inventory turnover

Question:

Accounts Receivable Turnover
Answer:

sales/average accounts receivable

,Question:

Average Collection Period (Days Sales Outstanding or Days Sales in Receivables)
Answer:

365/average receivable turnover

Question:

Accounts Payable Turnover
Answer:

COGS/average accounts payable

Question:

Days Purchases Outstanding
Answer:

365/accounts payable turnover;
average accounts payable/credit purchases per day

Question:

Cash Conversion Cycle
Answer:

Days Inventory + Average Collection
Period - Days Purchases Outstanding

Question:

Leverage
Answer:

average total assets/average total equity

Question:

Debt to Equity Ratio
Answer:

average total liabilities/average total equity

Question:

Current Ratio

,Answer:

current assets/current liabilities

Question:

Quick Ratio
Answer:

(current assets - inventory)/current liabilities

Question:

Interest Coverage Ratio (Times Interest Earned)
Answer:

EBIT/interest
expense

Question:

Free Cash Flow
Answer:

(1-t) x EBIT + Dep - CapX - changeNWC

Question:

Profit Margin
Answer:

net income/total sales (for period)

Question:

Gross Profit Margin
Answer:

gross profit /total sales (for period)

Question:

Return on Equity
Answer:

Profitability x Efficiency x Leverage

, Question:

Leverage
Answer:

assets/equity

Question:

Accrual Accounting Method
Answer:

transactions are recorded in the period
to which they relate, regardless of when cash is exchanged

Question:

Conservatism
Answer:

Record expenses or losses when they are probable,
but only record gains or revenue when they are realized

Question:

Historical Cost
Answer:

Transactions are recorded at the actual price at the
time of the transaction; value is shown at historical cost

Question:

Consistency
Answer:

using the same accounting methods over time

Question:

Materiality
Answer:

Deciding how much detail needs to be shown in
financial records