Business Mathematics Flashcards

A company earns $500,000 revenue and has COGS of $300,000. What is the gross profit margin?

Answer: 40%

Gross Profit = 500,000 − 300,000 = 200,000; Margin = 200,000 / 500,000 × 100 = 40%.

What is the P/E ratio if a stock's price is $60 and earnings per share is $4?

Answer: 15

P/E Ratio = Price per Share / EPS = 60 / 4 = 15.

Debt-to-equity ratio = 0.5. If total equity is $200,000, what is total debt?

Answer: $100,000

Debt = D/E Ratio × Equity = 0.5 × 200,000 = $100,000.

Annual revenue is $1.2M and average accounts receivable is $100,000. What is the receivables turnover ratio?

Answer: 12

Receivables Turnover = Revenue / Avg. Receivables = 1,200,000 / 100,000 = 12.

A bond has a face value of $1,000, coupon rate of 8%, and matures in 5 years. What is the total interest paid?

Answer: $400

Annual coupon = 8% × 1,000 = $80; total interest = $80 × 5 = $400.

A project costs $10,000 and generates $3,000 per year for 5 years. What is the simple payback period?

Answer: 3.33 years

Payback Period = Initial Investment / Annual Cash Flow = 10,000 / 3,000 ≈ 3.33 years.