Business Plan Financial Projections 2

Question 1

What does EBITDA stand for?

Accepted Answer

Earnings Before Interest, Taxes, Depreciation, and Amortization

Answer

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, used to evaluate operating performance.

Question 2

What is the purpose of a sensitivity analysis in financial projections?

Accepted Answer

To test how outcomes change under different assumptions

Answer

Sensitivity analysis tests how financial outcomes change when key assumptions (like sales volume or price) vary.

Question 3

What is a capital expenditure (CapEx) in a business plan?

Accepted Answer

Funds spent on long-term assets like equipment or property

Answer

Capital expenditures are funds used to acquire or upgrade long-term physical assets such as equipment, buildings, or technology.

Question 4

What does gross margin represent?

Accepted Answer

Revenue minus cost of goods sold, expressed as a percentage

Answer

Gross margin is revenue minus cost of goods sold (COGS), expressed as a percentage of revenue.

Question 5

Which metric shows how efficiently a company collects receivables?

Accepted Answer

Days Sales Outstanding (DSO)

Answer

Days Sales Outstanding (DSO) measures the average number of days it takes to collect payment after a sale.

Business Plan Practice Test