Financial Ratio Flashcards
7 cards from real Financial Management for Project Managers practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Ratio flashcards as text
A project has total assets of $500,000 and total liabilities of $200,000. What is the debt-to-equity ratio?
Answer: 0.67
Equity = $500,000 - $200,000 = $300,000; Debt-to-Equity = $200,000 / $300,000 = 0.67.
Which financial ratio best measures a project's ability to generate profit relative to its revenue?
Answer: Net profit margin
Net profit margin = Net Income / Revenue, directly measuring profitability per dollar of revenue.
A project reports EBIT of $80,000 and interest expense of $20,000. What is the interest coverage ratio?
Answer: 4.0
Interest Coverage Ratio = EBIT / Interest Expense = $80,000 / $20,000 = 4.0.
When a project manager evaluates the quick ratio, which asset is EXCLUDED that the current ratio includes?
Answer: Inventory
The quick ratio excludes inventory because it is less liquid than cash, receivables, or marketable securities.
A project's return on investment (ROI) is 25%. If the net profit is $50,000, what was the total investment?
Answer: $200,000
ROI = Net Profit / Investment; Investment = $50,000 / 0.25 = $200,000.
Which ratio would a project manager use to assess how efficiently a project converts assets into revenue?
Answer: Asset turnover ratio
Asset turnover ratio = Revenue / Total Assets, measuring efficiency of asset use in generating revenue.
A project has a current ratio of 1.2 and current liabilities of $100,000. What are the current assets?
Answer: $120,000
Current Assets = Current Ratio × Current Liabilities = 1.2 × $100,000 = $120,000.