CBC Financial Acumen & Business Finance 3

Question 1

A business coach is guiding a client through budget creation. Which budgeting approach requires managers to justify every expense from zero each period, regardless of prior budgets?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting starts each budget period from a zero baseline, requiring every expense to be re-justified rather than simply adjusting prior period figures.

Question 2

A client's accounts receivable days outstanding (DSO) has increased from 30 to 55 days. As their coach, you would flag this as a concern because:

Accepted Answer

The company is collecting cash from customers more slowly, potentially straining cash flow

Answer

An increasing DSO means it is taking longer to collect payment from customers, which can strain cash flow even if sales and profits are growing.

Question 3

When a business coach helps a client understand the 'time value of money,' the core principle being applied is:

Accepted Answer

A dollar available today is worth more than a dollar available in the future

Answer

The time value of money principle holds that money available now is worth more than the same amount in the future because it can be invested to earn a return.

Question 4

A client is evaluating whether to lease or buy equipment. Which financial concept most directly helps in comparing these two options over time?

Accepted Answer

Net present value (NPV) analysis

Answer

Net present value analysis discounts future cash flows to today's value, allowing a direct comparison of the true financial cost of leasing versus buying.

Question 5

A business coach notices a client's operating expense ratio is rising each quarter. This metric is calculated as:

Accepted Answer

Operating Expenses / Net Revenue × 100

Answer

The operating expense ratio is calculated by dividing total operating expenses by net revenue, indicating what percentage of revenue is consumed by operating costs.

(CBC) Certified Business Coach Practice Test

(CBC) Certified Business Coach Practice Test

CBC Financial Acumen & Business Finance 3