Business Acumen Quiz

Business Acumen Assessment

There are 18 questions. After you have answered the last question, you will get your Business Acumen score.

There is no data being collected anywhere other than a general aggregate across all who take the quiz. Good luck and have fun!

1. What does the income statement primarily show?*

Assets and liabilitiesCash inflows and outflowsRevenue and expenses over timeNet worth of the company

Answer: The income statement primarily shows revenue and expenses over time.

2. What does the balance sheet tells us?*

Whether or not the organization has a balanced strategyWhether or not the company has too much debtHow much revenue the company brought in last yearHow much the company's assets are worth, and how those assets were financed

Answer: How much the company's assets are worth, and how those assets were financed

3. Which of the following statements is potentially false?*

It is possible to be profitable, have sales growing and still have negative cash flows.Cash is the lifeblood of most businesses.The single most important challenge for most businesses is cash flow.If revenues are growing, you will always have positive cash flow.

Answer: "If revenues are growing, you will always have positive cash flow" is potentially false.

4. If a company’s gross margin is shrinking, what might be a likely cause?*

Reduced fixed costsIncreased product pricingHigher cost of goods soldIncreased volume of sales

Answer: Higher cost of goods sold

5. What does EBITDA stand for?*

Earnings before income tax and depreciationEarnings before interest, taxes, depreciation, and amortizationEarnings by industry, taxes, and dividends appliedEstimated balance of income, taxes, and assets

Answer: Earnings before interest, taxes, depreciation, and amortization

6. Why is cash flow different from profit?*

Cash flow includes taxes; profit does notCash flow is theoretical, profit is actualCash flow reflects actual movement of cash, while profit includes non-cash itemsThey are the same if a business is healthy

Answer: Cash flow reflects actual movement of cash, while profit includes non-cash items

7. A company’s inventory turnover is decreasing. This likely means:*

Products are selling fasterCosts are decliningInventory is sitting longer before being soldRevenue is increasing

Answer: Inventory is sitting longer before being sold

8. What is a breakeven point?*

The point at which expenses are highestWhere total costs equal total revenueThe moment of maximum profitWhen liabilities exceed assets

Answer: Where total costs equal total revenue

9. Which ratio best indicates a company's short-term liquidity?*

Gross margin ratioReturn on equityCurrent ratioPrice-to-earnings ratio

Answer: Current ratio

10. A company seeking to increase its gross margins could?*

Speed-up cash collections from customersDecrease production costsDecrease unit prices in order to sell more goodsIncrease its sales to larger customers

Answer: Decrease production costs

11. Improving profitability is the responsibility of who at our company?*

Senior managementThe marketing and sales organizationThe CFOAll Employees

Answer: All Employees

12. A publicly traded company's shareholders are interested in the Return on Equity number because it tells them?*

How well a company is serving its customersThe return earned on the capital shareholders have invested in the companyThe company's cost of capitalThe number of shares returned to the equity markets

Answer: The return earned on the capital shareholders have invested in the company

13. If some of our customers start taking longer to pay our company, what is the impact on our cash flow?*

Decreases cash flowIncreases cash flowHas no impact on cash flowDecreases those customer's cash flow

Answer: Decreases cash flow

14. In financial statements, assets equals?*

Equity plus IncomeDebt plus Accounts ReceivableEquity plus LiabilitiesDebt plus Retained Earnings

Answer: Equity plus Liabilities

15. In accounting, depreciation is often referred to as?*

The opposite of "Appreciation"Periodic expenseCapital ExpenseNon-cash expense

Answer: Non-cash expense

16. Most large companies record product revenues when?*

When the company receives an order from a customerWhen the products specified in the order are producedWhen the products are shipped to the customerWhen the customer pays for the order

Answer: When the products are shipped to the customer

17. Which indicator tells us how well a company is doing collecting cash from customers?*

RevenueDays sales outstandingGross marginOperating margin

Answer: Days sales outstanding

18. (Last question!) If a company is growing revenues, but its profit margin is declining, it most likely means?*

The company is not doing a good job collecting money from customersCosts are growing faster than revenuesThe company is increasing prices on its products/servicesThe company is borrowing too much from lenders

Answer: Costs are growing faster than revenues

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AverageScore3
Your Business Acumen Score: {AverageScore3}%

You got {NumberCorrect3} correct.

Scoring Key

Number of Correct answers

17 - 18	Exceptional business acumen
15 - 16	Strong business acumen
13 - 14	Moderate business acumen
11 - 12	Basic business acumen
10 or below	Low business acumen

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