Financial Analysis Flashcards

If replacing an employee costs 50% of a $70,000 salary and inclusion efforts prevent 20 departures, what are the estimated savings?

Answer: $700,000

$70,000 × 50% = $35,000 per departure × 20 = $700,000.

Which financial statement would most directly show the cost of a legal settlement from a discrimination lawsuit?

Answer: Income statement

Settlement expenses are recorded as expenses on the income statement and reduce net income.

An internal rate of return (IRR) on a diversity initiative is best defined as the discount rate at which:

Answer: NPV equals zero

IRR is the discount rate that makes the NPV of all cash flows equal zero.

A DEI leader wants to forecast next year's budget based on expected hiring volume. Which budget type adjusts automatically to activity levels?

Answer: Flexible budget

A flexible budget scales costs to the actual or expected level of activity.

When presenting a DEI business case to a CFO, which framing is usually most persuasive?

Answer: Linking outcomes to revenue, cost, and risk metrics the business already tracks

Finance leaders respond best to evidence tied to existing financial and risk KPIs.

Spending on a new HRIS module to track workforce demographics over several years would typically be treated as a:

Answer: Capital expenditure

Long-lived system investments are often capitalized and depreciated or amortized over their useful life.

Which of these is a leading indicator rather than a lagging indicator of DEI financial outcomes?

Answer: Inclusion survey scores

Inclusion scores can predict future retention and performance, while the others record past results.