CORPORATE FINANCE INSTITUTE (CFI) TERMS- FINANCIAL
ANALYSIS FUNDAMENTALS QUESTIONS WITH DETAILED
VERIFIED AND 100% ACCURATE ANSWERS ALREADY GRADED A+
ACCOUNTS PAYABLE - (ANSWER)Amounts owed by an organization to others for goods or services
received. Buying from suppliers on credit will generate accounts payable.
ACCOUNTS RECEIVABLE - (ANSWER)Amounts due to an organization for goods delivered or services
rendered. Selling to customers on credit will generate accounts receivable for a business.
ACCOUNTS PAYABLE DAYS RATIO - (ANSWER)Accounts payable / COGS x 365. Average number of days a
firm takes to pay for items purchased.
ACCOUNTS PAYABLE TURNOVER - (ANSWER)Cost of sales / Accounts payable (either the ending balance
or average balance). This ratio measures how effective management is in paying its suppliers.
ACCOUNTS RECEIVABLE DAYS RATIO - (ANSWER)Accounts receivable / Sales x 365. Average number of
days a firm takes to collect payments on goods sold.
ACCOUNTS RECEIVABLE TURNOVER - (ANSWER)Sales / Accounts receivable (either the ending balance,
or average balance). This ratio measures how effective the company's credit policies are.
ACID TEST - (ANSWER)See quick ratio.
ADMINISTRATION COST RATIO - (ANSWER)Administration costs / Sales. This margin shows the general
overhead cost for each dollar of sales.
AMORTIZATION - (ANSWER)The gradual reduction of a financial amount over time.
ASSETS - (ANSWER)Resources owned and employed by an organization which confer future economic
benefits.
ASSET TURNOVER RATIO - (ANSWER)Sales / Total assets. This ratio shows how effective the company is in
, CORPORATE FINANCE INSTITUTE (CFI) TERMS- FINANCIAL
ANALYSIS FUNDAMENTALS QUESTIONS WITH DETAILED
VERIFIED AND 100% ACCURATE ANSWERS ALREADY GRADED A+
AUDIT - (ANSWER)The process of examination and verification of a firm's books of account, transaction
records, and other relevant documents including financial models.
AVERAGE BALANCE - (ANSWER)(Opening balance - Closing balance) / 2. This balance can be used to
calculate efficiency / turnover ratios instead of using a closing balance.
BALANCE SHEET - (ANSWER)The balance sheet is a 'snapshot' of an organization's assets and liabilities on
a particular date. The balance sheet shows the sources of funds provided to an organization (called the
capital employed and normally either equity or debt) and how those funds have been used by the
organization to invest in fixed assets (assets the organization intends to keep for more than one year)
and working capital (money tied up in the day to day operations of the business).
CAPITAL - (ANSWER)See capital employed.
CAPITAL ASSET - (ANSWER)Assets such as property, plant and equipment employed to generate income.
CAPITAL EMPLOYED - (ANSWER)Synonyms: capital, Capital employed represents the funds provided to
an organization in the form of equity or debt.
CAPITAL IN EXCESS OF PAR VALUE - (ANSWER)See contributed surplus.
CAPITAL STOCK - (ANSWER)Synonyms: stock, shares, share capital. There are two types of stock -
common stock and preferred stock. Most shares tend to be common stock and generally carry one vote
each and carry an equal right to a proportionate share of dividends.
Capitalstockisnotaliabilityinthesenseofothersourcesoffunds(e.g. bank loans) since it is not generally paid
back to shareholders unless the company is wound up.
ANALYSIS FUNDAMENTALS QUESTIONS WITH DETAILED
VERIFIED AND 100% ACCURATE ANSWERS ALREADY GRADED A+
ACCOUNTS PAYABLE - (ANSWER)Amounts owed by an organization to others for goods or services
received. Buying from suppliers on credit will generate accounts payable.
ACCOUNTS RECEIVABLE - (ANSWER)Amounts due to an organization for goods delivered or services
rendered. Selling to customers on credit will generate accounts receivable for a business.
ACCOUNTS PAYABLE DAYS RATIO - (ANSWER)Accounts payable / COGS x 365. Average number of days a
firm takes to pay for items purchased.
ACCOUNTS PAYABLE TURNOVER - (ANSWER)Cost of sales / Accounts payable (either the ending balance
or average balance). This ratio measures how effective management is in paying its suppliers.
ACCOUNTS RECEIVABLE DAYS RATIO - (ANSWER)Accounts receivable / Sales x 365. Average number of
days a firm takes to collect payments on goods sold.
ACCOUNTS RECEIVABLE TURNOVER - (ANSWER)Sales / Accounts receivable (either the ending balance,
or average balance). This ratio measures how effective the company's credit policies are.
ACID TEST - (ANSWER)See quick ratio.
ADMINISTRATION COST RATIO - (ANSWER)Administration costs / Sales. This margin shows the general
overhead cost for each dollar of sales.
AMORTIZATION - (ANSWER)The gradual reduction of a financial amount over time.
ASSETS - (ANSWER)Resources owned and employed by an organization which confer future economic
benefits.
ASSET TURNOVER RATIO - (ANSWER)Sales / Total assets. This ratio shows how effective the company is in
, CORPORATE FINANCE INSTITUTE (CFI) TERMS- FINANCIAL
ANALYSIS FUNDAMENTALS QUESTIONS WITH DETAILED
VERIFIED AND 100% ACCURATE ANSWERS ALREADY GRADED A+
AUDIT - (ANSWER)The process of examination and verification of a firm's books of account, transaction
records, and other relevant documents including financial models.
AVERAGE BALANCE - (ANSWER)(Opening balance - Closing balance) / 2. This balance can be used to
calculate efficiency / turnover ratios instead of using a closing balance.
BALANCE SHEET - (ANSWER)The balance sheet is a 'snapshot' of an organization's assets and liabilities on
a particular date. The balance sheet shows the sources of funds provided to an organization (called the
capital employed and normally either equity or debt) and how those funds have been used by the
organization to invest in fixed assets (assets the organization intends to keep for more than one year)
and working capital (money tied up in the day to day operations of the business).
CAPITAL - (ANSWER)See capital employed.
CAPITAL ASSET - (ANSWER)Assets such as property, plant and equipment employed to generate income.
CAPITAL EMPLOYED - (ANSWER)Synonyms: capital, Capital employed represents the funds provided to
an organization in the form of equity or debt.
CAPITAL IN EXCESS OF PAR VALUE - (ANSWER)See contributed surplus.
CAPITAL STOCK - (ANSWER)Synonyms: stock, shares, share capital. There are two types of stock -
common stock and preferred stock. Most shares tend to be common stock and generally carry one vote
each and carry an equal right to a proportionate share of dividends.
Capitalstockisnotaliabilityinthesenseofothersourcesoffunds(e.g. bank loans) since it is not generally paid
back to shareholders unless the company is wound up.
