Finance for Non-Financial Professionals Coursera Quiz Answers

Finance for Non-Financial Professionals Week 1 Quiz Answers
Quiz 1: Module 1 Quiz



Q1. Which of the following is referred to as the Accounting Equation?

Assets = Liabilities + Equity
Equity = Liabilities + Assets
Liabilities = Assets + Equity
Assets = Liabilities – Equity


Q2. Which of the following make up the Finance Equation? (select all that apply)

Revenues = Price x Volume
Costs = Fixed + Variable
Profit = Revenues – Costs
Income = Sales – COGS


Q3. Which of the following are referred to as the building blocks of accounting? (select all that apply)

Assets
Debits
Credits
Liabilities
Equity



Q4. Which of the following is NOT one of the four Financial Statements?

Income Statement
Balance Sheet
Statement of Accounts
Statement of Cash Flows
Shareholder’s Equity



Q5. Generally Accepted Accounting Principles or GAAP are:

Accounting rules enforced by law
Accounting principles and guidelines
Enforced by law in some countries but not in others
The only way to be sure your books are correct



Q6. The balance sheet is the representation of what?

the accounting equation
company profits
shareholder’s equity
company’s cash flow



Q7. Consider this example. Soriyah is an entrepreneur who has just established her own company selling imported Persian rugs. She names her business Rugs of the World and invests $325,000 in the company in exchange for all of its newly issued shares.

Which of the following statements are true?

Assets and equity are both recorded as $325,000
Assets are recorded as $325,000
Equity is recorded as $325,000
Liabilities are recorded as $325,000
All of the statements are true



Q8. In one of the videos, the instructor says that “in Accounting you can have minus $1,000,000, but in Finance you can’t.” This statement explains what?

Accounting is theory but Finance is practice
Finance looks at financial performance whereas Accounting records the transactions
Balance sheets can be deceptive
Most income statements are only approximations



Q9. Which of these is a snapshot of a company’s finances at a particular point in time?

Balance sheet
Income statement
Statement of shareholders’ equity
GAAP

Finance for Non-Financial Professionals Week 3 Quiz Answers
Quiz 1: Module 3 Quiz


Q1. _____________________ ratios help us understand a company’s ability to turn short-term assets into cash.

Liquidity
Asset Turnover
Profitability
Debt


Q2. _____________________ ratios help us understand a company’s debt load as well as its mix of equity and debt.

Liquidity
Asset Turnover
Profitability
Debt


Q3. _____________________ ratios are a class of financial metrics that are used to assess a business’s ability to generate earnings.

Liquidity
Asset Turnover
Profitability
Debt


Q4. _____________________ ratios are a class of financial metrics that is used to measure the turnover of assets.

Liquidity
Asset Turnover
Profitability
Debt Ratios



Q5. According to the DuPont Pyramid, operating efficiency is:

measured by profit margin
measured by total asset turnover
measured by the equity multiplier



Q6. According to the DuPont Pyramid, asset use efficiency is:

measured by profit margin
measured by total asset turnover
measured by the equity multiplier



Q7. According to the DuPont Pyramid, financial leverage is:

measured by profit margin
measured by total asset turnover
measured by the equity multiplier



Q8. The Quick Ratio is known as the “acid test” of ratios because it’s a quick way of finding out whether a company has enough assets to cover its liabilities.

True
False



Q9. The Quick Ratio does not include a company’s inventory because companies can’t always convert their inventory into a liquid asset in order to pay their bills.

True
False



Q10. The earnings per share (EPS) ratio:

tells you how much the market is willing to pay for each dollar of profit in a company
tells you how much a company is leveraged
indicates a company’s profitability
tells you the profit per sales dollar



Q11. The price earnings (P/E) ratio:

tells you how much the market is willing to pay for each dollar of profit in a company
tells you how much a company is leveraged
indicates a company’s projected profitability
tells you the profit per sales dollar

Finance for Non-Financial Professionals Week 4 Quiz Answers
Quiz 1: Module 4 Quiz



Q1. Which is the simplest form of company valuation?

Market Valuation
Multiples Method
Discounted Cash Flow (DCF) Analysis
Comparison Method



Q2. To use the Market Valuation method, you need the company’s stock price and the number of:

Employees
Outstanding Shares
Issued Shares
Dividends Paid



Q3. Using a set of common metrics to valuate a company based on other companies in the same sector is better known as:

Market Valuation
Multiples Method
Discounted Cash Flow (DCF) Analysis
Comparison Method



Q4. The Discounted Cash Flow method uses a company’s free cash flows and a discount rate to calculate the:

Internal Rate of Return (IRR)
Net Present Value (NPV)
Cost of Goods Sold (GOGS)
DuPont Pyramid



Q5. The _______________________ is the yield of an investment expressed as a percentage.

Internal Rate of Return (IRR)
Net Present Value (NPV)
Cost of Goods Sold (GOGS)
DuPont Pyramid



Q6. The IRR of a venture is the rate of return at which the NPV = 0.

True
False



Q7. Valuation answers the   “What is a company worth?”

True
False



Q8. Which of the three valuation methods discussed is driven by traders and can suffer from a “herd mentality”?

Market valuation
Multiples method
Discounted cash flow (DCF) analysis



Q9. Because the Multiples method of valuation compares companies that are in the same sector, you should choose 15 or 20 companies to examine.

True
False



Q10. The premise behind Net Present Value is:

Money today is worth more than money a year from now.
A company may shrink or expand in the future
What investors do today may not predict what they’ll do a year from now
Investors are fickle and may sell their stocks on a whim