Robert Half Assessment Test Robert Half Assessment Financial Analysis Questions and Answers 1 — Questions and Answers
Question 1: What does a current ratio of less than 1.0 indicate about a company?
- The company has more current assets than current liabilities
- The company cannot cover its short-term liabilities with its current assets (Correct answer)
- The company is highly profitable
- The company has no long-term debt
Correct answer: The company cannot cover its short-term liabilities with its current assets
A current ratio below 1.0 means the company's current liabilities exceed its current assets, signaling potential liquidity problems.
Question 2: Which financial statement shows a company's revenues and expenses over a specific period?
- Balance Sheet
- Cash Flow Statement
- Income Statement (Correct answer)
- Statement of Retained Earnings
Correct answer: Income Statement
The income statement (also called a profit and loss statement) summarizes revenues, costs, and expenses to show net profit or loss.
Question 3: What does EBITDA stand for?
- Earnings Before Interest, Taxes, Dividends, and Amortization
- Earnings Before Interest, Taxes, Depreciation, and Amortization (Correct answer)
- Equity Balance Including Total Debt and Assets
- Estimated Budget Including Taxes, Depreciation, and Allowances
Correct answer: Earnings Before Interest, Taxes, Depreciation, and Amortization
EBITDA measures a company's core operational profitability by excluding non-operating and non-cash expenses.
Question 4: What does a negative free cash flow indicate?
- The company is generating more cash than it spends
- The company is spending more cash than it generates from operations (Correct answer)
- The company has no debt obligations
- The company's stock price is declining
Correct answer: The company is spending more cash than it generates from operations
Negative free cash flow means the company is consuming more cash than its operations produce, which may require financing.
Question 5: What is the debt-to-equity (D/E) ratio used to measure?
- How much profit a company makes per dollar of equity
- The proportion of financing that comes from creditors versus shareholders (Correct answer)
- How quickly a company collects its receivables
- The total market value of a company's shares
Correct answer: The proportion of financing that comes from creditors versus shareholders
The D/E ratio shows how leveraged a company is — a higher ratio indicates more reliance on debt financing.
Question 6: Which of the following best describes 'working capital'?
- Total assets minus total liabilities
- Current assets minus current liabilities (Correct answer)
- Net income plus depreciation
- Long-term debt minus equity
Correct answer: Current assets minus current liabilities
Working capital measures a company's short-term financial health by comparing what it owns versus what it owes in the near term.
Robert Half Assessment Test Robert Half Assessment Financial Analysis Questions and Answers 1
What does a current ratio of less than 1.0 indicate about a company?