Financial Fitness Quiz

With this short quiz you can test your financial fitness. Are you familiar with the key concepts and do you know how money flows in a business? Answers to the questions can be found on this website, in the background material, and of course in the business games and simulations of BMI!

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Check your answers below. The correct answer is printed bold.

If a business wants to increase profits then...

  • A. cashflow must be increased.
  • B. revenue must be increased.
  • C. costs must be cut.
  • D. Both A and B are correct.
  • D. Both B and C are correct.

Which of following quotes on the cash flow statement is correct?

  • A. The balance of this overview is profit (or loss).
  • B. It contributes to the understanding of the financing of the activities of the business in the fiscal year.
  • C. Depreciation is part of the cash flow from investing activities.

Depreciation on machinery has the objective of:

  • A. Put money aside for replacement.
  • B. Determine the value of the inventory.
  • C. Decline in value of assets through usage.

If a business needs funds for the purchase of a new building, without increasing equity, then they should...

  • A. Increase revenue.
  • B. Increase the borrowing capacity.
  • C. Increase liabilities.
  • D. Both A and B are correct.
  • E. Both B and C are correct.

A business has a net profit of 10%. At a certain moment the company decides to give a discount of 5% because it is expected that sales will decrease. Management assumes that by giving the discount will not decrease sales volume. In that case...

  • A. The net profit turns 9.5%.
  • B. Revenue decreases by 5%.
  • C. Net profit ratio decreases by 50%.
  • D. Net profit ratio remains the same.
  • E. Both B and C are correct.

Which statement is correct?
1. As financial results are related to the past, they can not be used for management decisions in the future.
2. Financial results may only be used by accountants.

  • A. Statement 1 and 2 are both correct.
  • B. Only statement 1 is correct.
  • C. Only statement 2 is correct.
  • D. Statement 1 and 2 are both incorrect.