CBA Financial Analysis & Business Valuation

Question 1

Which financial statement best indicates a company's profitability over a period?

Accepted Answer

Income Statement

Answer

Balance Sheet

Answer

Statement of Retained Earnings

Answer

Cash Flow Statement

Question 2

What does the current ratio measure in financial analysis?

Accepted Answer

Liquidity

Answer

Profitability

Answer

Leverage

Answer

Inventory turnover

Question 3

Which valuation method uses projected future cash flows to estimate a company’s worth?

Accepted Answer

Discounted Cash Flow

Answer

Book Value Method

Answer

Comparable Company Analysis

Answer

Market Multiples

Question 4

Why is EBITDA often used in business valuation?

Accepted Answer

It isolates core profitability

Answer

It includes all tax obligations

Answer

It represents net income

Answer

It excludes operational earnings

Question 5

What does a high debt-to-equity ratio typically indicate?

Accepted Answer

High use of leverage

Answer

Strong equity backing

Answer

Low financial risk

Answer

High cash reserves

Question 6

Why is trend analysis important in financial forecasting?

Accepted Answer

It identifies financial patterns

Answer

It determines market size

Answer

It evaluates employee performance

Answer

It measures tax liabilities