Business Case Writing Financial Analysis in Business Cases 2

Question 1

In business case financial modeling, which term describes benefits that are difficult to quantify in dollar terms?

Accepted Answer

Intangible benefits

Answer

Tangible benefits

Answer

Fixed benefits

Answer

Direct benefits

Question 2

Break-even analysis in a business case determines the point at which:

Accepted Answer

Revenue equals total costs

Answer

Profit is maximized

Answer

Cash flow is highest

Answer

Market share peaks

Question 3

What does a positive cash flow in Year 1 of a business case typically indicate?

Accepted Answer

The project generates more cash than it spends in that year

Answer

The project has already paid back its investment

Answer

NPV is positive

Answer

The project requires no further funding

Question 4

Which financial statement is most critical for assessing a project's liquidity impact in a business case?

Accepted Answer

Cash flow statement

Answer

Income statement

Answer

Balance sheet

Answer

Statement of retained earnings

Question 5

In a business case, 'total cost of ownership' (TCO) includes:

Accepted Answer

Acquisition, operating, and disposal costs over the asset's life

Answer

Only the purchase price

Answer

Only recurring maintenance fees

Answer

Only direct labor costs

Question 6

A business case financial model should use 'real' (inflation-adjusted) cash flows when the discount rate is:

Accepted Answer

A real (inflation-excluded) rate

Answer

A nominal rate

Answer

The federal funds rate

Answer

A risk-free rate