Ratios
Investment Decision Criteria
Principles of Finance
Time Value of Money
Wild Card
100
These ratios assess a firms ability to pay its bills as they come due.
What are Liquidity Ratios?
100
The number of years needed to recover the initial cash outlay required to make the investment.
What is Payback Period
100
The study of how people and businesses evaluate investments and raise capital for investments.
What is Finance?
100
Interest earned on the principal amount.
What is simple interest?
100
The weighted average of the required returns of the securities that are used to finance a firm.
What is the Weighted Average Cost of Capital or WACC?
200

Current assets divided by current liabilities.

What is the Current Ratio?

200
A widely used method of evaluating potential investments, which can produce multiple answers when unconventional cash flows are used.
What is IRR or Internal Rate of Return
200
Sole Proprietorship, General Partnership and Corporation
What are the three types of business organizations?
200
The value of a sum of money compounded at a given interest rate for a specific period of time.
What is Future Value?
200
The price of one currency stated in terms of another.
What is the Exchange Rate?
300
These Ratios examine how a firm's shares are valued in the stock market.
What are Market Value Ratios?
300

The part of a firm’s  net income it reinvests

Retained earnings



300
Where an investor places an order to buy or sell a debt or equity security, such that the issuer receives no money.
What is the secondary market?
300

Exxon Mobile a gas company is in which sector

Energy

300

Personal funds, Insurance companies, and brokerage firms are an example of this:

What is a non banking institution.


400

Name two Liquidity Ratios.





  • Current Liquidity Ratio.
  • Acid-Test Liquidity Ratio (Quick Ratio).
  • Cash Liquidity Ratio.
  • Operating Cash Flow Liquidity Ratio.
400

What does a beta of 1 mean?



The stock's price tends to move with the market



400

Cash Flows are the Source of Value

What is A Principle of Finance

400
A loan which is paid off in equal payments.
What is an Amortized Loan?
400
The process of buying and selling in more than one market to make a riskless profit.
What is Arbitrage?
500
These ratios indicate how the firm has financed the purchase of assets using debt and equity funds.
What Capital Structure Ratios?
500
Known as the "holy grail" of criteria for evaluating new investment opportunities, this is calculated as the difference between the present value of cash inflow and cash outflows.
What is NPV or Net Present Value
500

Maximize Shareholder Wealth

What is the main goal of financial managers?

500
An annuity that has no maturity.
What is a Perpetuity?
500

This is the guardian of the American financial system

What is the Federal Reserve.


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