Business Certifications Financial Management & Budgeting Flashcards
6 cards from real Business Certifications practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Business Certifications Financial Management & Budgeting flashcards as text
What does "working capital" represent in financial management?
Answer: Current assets minus current liabilities
Working capital is calculated as current assets minus current liabilities and represents the funds available for a company's day-to-day operations.
A cost-benefit analysis is used to:
Answer: Compare the financial costs and expected benefits of a decision or project
A cost-benefit analysis evaluates whether the expected benefits of a decision or project outweigh its costs to support informed business decision-making.
Which budgeting approach allocates resources based on prior period spending plus a percentage adjustment?
Answer: Incremental budgeting
Incremental budgeting starts with the previous period's budget and applies a percentage increase or decrease to set the new budget.
Liquidity in financial management refers to:
Answer: How easily assets can be converted to cash without a significant loss in value
Liquidity refers to how quickly and easily an asset can be converted into cash without materially affecting its value.
What is the break-even point for a business?
Answer: The point where total revenue equals total costs, resulting in zero profit or loss
The break-even point is where total revenue equals total costs (fixed plus variable), meaning the business makes neither a profit nor a loss.
Which financial metric measures how efficiently a company uses its assets to generate profit?
Answer: Return on assets (ROA)
Return on assets (ROA) measures how efficiently a company uses its total assets to generate net income, calculated as net income divided by total assets.