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 manager calculates a gross profit margin of 40% on revenue of $250,000. What is the gross profit?
Answer: $100,000
Gross Profit = Gross Profit Margin × Revenue = 0.40 × $250,000 = $100,000.
Which financial ratio is most useful for comparing the profitability of projects with different scales?
Answer: Return on investment (ROI)
ROI is expressed as a percentage, allowing fair comparison across projects of different sizes.
A project has accounts receivable of $60,000 and annual credit sales of $360,000. What is the receivables turnover ratio?
Answer: 6.0
Receivables Turnover = Annual Credit Sales / Accounts Receivable = $360,000 / $60,000 = 6.0.
If a project's days sales outstanding (DSO) is 45 days, what does this indicate?
Answer: The project collects receivables in 45 days on average
DSO measures the average number of days it takes to collect payment after a sale is made.
A project manager compares two projects: Project A has an ROI of 18% and Project B has an ROI of 22%. Which statement is most accurate?
Answer: Project B is more cost-efficient per dollar invested
A higher ROI means Project B generates more return per dollar invested, indicating greater investment efficiency.
What does a declining current ratio over multiple project reporting periods most likely indicate?
Answer: Deteriorating short-term liquidity
A declining current ratio suggests that current liabilities are growing faster than current assets, signaling liquidity stress.
A project has total debt of $400,000 and total equity of $600,000. How is this debt-to-equity ratio best interpreted?
Answer: The project is conservatively financed with more equity than debt
A D/E ratio of 0.67 means equity exceeds debt, indicating conservative financing with moderate leverage.