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

Intangible benefits, such as improved employee morale or brand reputation, are real but hard to assign a precise monetary value.

Question 2

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

Accepted Answer

Revenue equals total costs

Answer

The break-even point is where total revenues equal total costs, resulting in neither profit nor loss.

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

A positive cash flow in any given year means the project's inflows exceeded its outflows for that period.

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

The cash flow statement shows actual cash movements, making it essential for evaluating whether a project can meet its financial obligations.

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

TCO captures all costs associated with an asset from acquisition through disposal, providing a complete financial picture.

Business Case Writing Practice Test