CBC Financial Acumen & Business Finance

Question 1

A business coach is helping a client understand their company's financial health. Which financial statement shows the company's revenues, expenses, and net profit over a specific period?

Accepted Answer

Income Statement

Answer

The Income Statement (also called Profit & Loss Statement) reports revenues, expenses, and net income over a defined accounting period.

Question 2

When coaching a small business owner, you explain that 'gross profit margin' is best calculated as:

Accepted Answer

(Revenue − Cost of Goods Sold) / Revenue × 100

Answer

Gross profit margin equals revenue minus cost of goods sold divided by revenue, showing how efficiently a company produces its goods or services.

Question 3

A client's business has a current ratio of 0.8. As their business coach, what should you communicate about this metric?

Accepted Answer

The business may struggle to meet short-term obligations

Answer

A current ratio below 1.0 indicates current liabilities exceed current assets, signaling potential difficulty paying short-term debts as they come due.

Question 4

Which of the following best describes 'working capital' in a business context?

Accepted Answer

Current assets minus current liabilities

Answer

Working capital is calculated as current assets minus current liabilities and measures a company's short-term liquidity and operational efficiency.

Question 5

A business coach helping a client with pricing strategy should explain that 'break-even analysis' determines:

Accepted Answer

The point at which total revenue equals total costs, resulting in neither profit nor loss

Answer

Break-even analysis identifies the sales volume at which total revenues equal total costs, meaning the business covers all expenses with zero profit or loss.

(CBC) Certified Business Coach Practice Test

(CBC) Certified Business Coach Practice Test

CBC Financial Acumen & Business Finance