Finance for Non-Finance Managers Jeopardy

The first line of the income statement, showing total sales, is called this.

What is revenue?

Net income is often called this, after where it appears on the statement.

What is the bottom line?

Revenue minus cost of goods sold gives this.

What is gross profit?

Salaries, rent and marketing that are not part of making the product fall under these, often called overhead.

What are operating expenses?

This profit figure adds depreciation and amortization back to earnings before interest and taxes.

What is EBITDA?

Cash, inventory and buildings are examples of these.

What are assets?

Amounts a company owes its suppliers for purchases on credit are recorded as this.

What are accounts payable?

Current assets minus current liabilities equals this.

What is working capital?

Profits kept in the business over the years rather than paid out as dividends appear as this.

What are retained earnings?

Paying more for an acquired company than the fair value of its net assets creates this intangible asset.

What is goodwill?

A profitable company can still fail if it runs out of this.

What is cash?

Money customers owe for goods or services already delivered is called this.

What are accounts receivable?

The cash flow statement's three sections are operating, investing and this.

What is financing?

Operating cash flow minus capital expenditures gives this.

What is free cash flow?

The number of days between paying for inventory and collecting cash from customers is measured by this cycle.

What is the cash conversion cycle?

Spending less than budgeted on a cost produces this kind of variance.

What is favorable?

Big long-term purchases like equipment and buildings are planned in this kind of budget.

What is a capital budget?

This approach makes every expense be justified from scratch each period rather than starting from last year's number.

What is zero-based budgeting?

A budget that adjusts to the actual level of activity, such as units produced, is called this.

What is a flexible budget?

This forecast adds a new month or quarter as each one ends, so it always looks the same distance ahead.

What is a rolling forecast?

A product that sells for $100 and costs $60 to make has this gross margin.

What is 40 percent?

This liquidity ratio divides short-term assets by short-term obligations.

What is the current ratio?

Gain from an investment minus its cost, divided by its cost, gives this three-letter measure.

What is ROI?

Profit after all expenses and taxes, divided by revenue, gives this margin.

What is net profit margin?

The break-even point in units equals fixed costs divided by this per-unit amount.

What is contribution margin?

These costs, like rent, stay the same no matter how much you sell.

What are fixed costs?

Goods waiting to be sold tie up cash in this asset.

What is inventory?

This method records revenue when earned and expenses when incurred, not when cash moves.

What is accrual accounting?

This term describes spreading the cost of an intangible asset, like a patent, over its useful life.

What is amortization?

This hurdle rate blends the cost of debt and the cost of equity into one percentage, known by four letters.

What is the weighted average cost of capital?