Q. A business forecasts a growth rate of 10% per year. If its current revenue is $500,000, what will its revenue be in 2 years?
A.
$550,000
B.
$605,000
C.
$610,000
D.
$620,000
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Solution
Future revenue can be calculated using the formula: future value = present value * (1 + growth rate)^number of years. Thus, $500,000 * (1 + 0.10)^2 = $500,000 * 1.21 = $605,000.
Correct Answer:
B
— $605,000
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Q. A business has a current ratio of 2:1. If its current liabilities are $50,000, what are its current assets?
A.
$100,000
B.
$150,000
C.
$200,000
D.
$250,000
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Solution
Current ratio is calculated as current assets divided by current liabilities. If the current ratio is 2:1 and current liabilities are $50,000, then current assets = 2 * $50,000 = $100,000.
Correct Answer:
A
— $100,000
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Q. A business has fixed costs of $20,000 and variable costs of $5 per unit. If the selling price is $15 per unit, how many units must be sold to break even?
A.
2,000 units
B.
1,000 units
C.
4,000 units
D.
3,000 units
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Solution
Break-even point = Fixed Costs / (Selling Price - Variable Cost) = 20,000 / (15 - 5) = 2,000 units.
Correct Answer:
A
— 2,000 units
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Q. A company has a debt of $100,000 and equity of $50,000. What is its debt-to-equity ratio?
A.
2:1
B.
1:2
C.
1:1
D.
3:1
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Solution
Debt-to-Equity Ratio = Total Debt / Total Equity = 100,000 / 50,000 = 2:1.
Correct Answer:
A
— 2:1
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Q. A company’s operating income is $150,000 and its interest expenses are $30,000. What is its earnings before tax?
A.
$120,000
B.
$150,000
C.
$180,000
D.
$200,000
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Solution
Earnings before tax is calculated as operating income minus interest expenses. Therefore, $150,000 - $30,000 = $120,000.
Correct Answer:
C
— $180,000
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Q. A firm has a debt-to-equity ratio of 1.5. If its total equity is $200,000, what is its total debt?
A.
$300,000
B.
$400,000
C.
$500,000
D.
$600,000
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Solution
Debt-to-equity ratio is calculated as total debt divided by total equity. If the ratio is 1.5 and equity is $200,000, then total debt = 1.5 * $200,000 = $300,000.
Correct Answer:
B
— $400,000
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Q. A startup has an initial investment of $50,000 and expects to generate $10,000 in profit annually. What is the payback period?
A.
2 years
B.
3 years
C.
4 years
D.
5 years
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Solution
Payback period is calculated as initial investment divided by annual profit. Therefore, $50,000 / $10,000 = 5 years.
Correct Answer:
B
— 3 years
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Q. If a business has a market share of 25% in a market worth $2,000,000, what is the business's revenue from that market?
A.
$400,000
B.
$500,000
C.
$600,000
D.
$700,000
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Solution
Revenue from the market is calculated as market share multiplied by total market value. Thus, 25% of $2,000,000 = 0.25 * $2,000,000 = $500,000.
Correct Answer:
A
— $400,000
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Q. If a company has a total revenue of $500,000 and total expenses of $300,000, what is its net profit?
A.
$200,000
B.
$300,000
C.
$500,000
D.
$100,000
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Solution
Net profit is calculated as total revenue minus total expenses. Therefore, $500,000 - $300,000 = $200,000.
Correct Answer:
A
— $200,000
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Q. If a company has current assets of $150,000 and current liabilities of $75,000, what is its current ratio?
A.
2:1
B.
1:2
C.
1:1
D.
3:1
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Solution
Current Ratio = Current Assets / Current Liabilities = 150,000 / 75,000 = 2:1.
Correct Answer:
A
— 2:1
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Q. If a company has total sales of $500,000 and the total market sales are $2,000,000, what is its market share?
A.
25%
B.
50%
C.
75%
D.
10%
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Solution
Market share = (500,000 / 2,000,000) * 100 = 25%.
Correct Answer:
A
— 25%
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Q. If a company’s revenue is $300,000 and its expenses are $250,000, what is its profit margin?
A.
10%
B.
20%
C.
15%
D.
5%
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Solution
Profit Margin = (Revenue - Expenses) / Revenue = (300,000 - 250,000) / 300,000 = 0.1667 or 16.67%.
Correct Answer:
B
— 20%
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Q. If a company’s sales increase from $1,000,000 to $1,200,000, what is the percentage increase in sales?
A.
10%
B.
15%
C.
20%
D.
25%
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Solution
Percentage increase is calculated as (new value - old value) / old value * 100. Thus, ($1,200,000 - $1,000,000) / $1,000,000 * 100 = 20%.
Correct Answer:
C
— 20%
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Q. If a company’s total assets are $1,000,000 and total liabilities are $600,000, what is its equity?
A.
$200,000
B.
$300,000
C.
$400,000
D.
$500,000
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Solution
Equity is calculated as total assets minus total liabilities. Thus, $1,000,000 - $600,000 = $400,000.
Correct Answer:
C
— $400,000
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Q. If a company’s total assets are $500,000 and total liabilities are $300,000, what is its equity?
A.
$200,000
B.
$300,000
C.
$500,000
D.
$100,000
Show solution
Solution
Equity = Total Assets - Total Liabilities = 500,000 - 300,000 = $200,000.
Correct Answer:
A
— $200,000
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Q. If a product costs $80 to produce and is sold for $120, what is the markup percentage?
A.
25%
B.
33.33%
C.
40%
D.
50%
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Solution
Markup percentage is calculated as (selling price - cost) / cost * 100. Thus, ($120 - $80) / $80 * 100 = 50%.
Correct Answer:
B
— 33.33%
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Q. If an investment of $50,000 generates a net profit of $10,000, what is the ROI?
A.
20%
B.
15%
C.
25%
D.
10%
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Solution
ROI = (10,000 / 50,000) * 100 = 20%.
Correct Answer:
A
— 20%
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Q. What is the formula for calculating Return on Investment (ROI)?
A.
(Net Profit / Cost of Investment) * 100
B.
(Cost of Investment / Net Profit) * 100
C.
(Net Profit / Revenue) * 100
D.
(Revenue / Net Profit) * 100
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Solution
ROI is calculated by dividing the net profit by the cost of investment and multiplying by 100.
Correct Answer:
A
— (Net Profit / Cost of Investment) * 100
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Q. What is the formula for calculating the current ratio?
A.
Current Assets / Current Liabilities
B.
Current Liabilities / Current Assets
C.
Total Assets / Total Liabilities
D.
Total Liabilities / Total Assets
Show solution
Solution
Current Ratio is calculated by dividing current assets by current liabilities.
Correct Answer:
A
— Current Assets / Current Liabilities
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Q. What is the formula to calculate the market share of a company?
A.
Total Sales of Company / Total Market Sales
B.
Total Market Sales / Total Sales of Company
C.
Total Sales of Company / Total Sales of Competitors
D.
Total Sales of Competitors / Total Sales of Company
Show solution
Solution
Market share is calculated by dividing the total sales of the company by the total sales of the market.
Correct Answer:
A
— Total Sales of Company / Total Market Sales
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