Financial Theory FAQs

  1. What is backtesting in Value at Risk (VaR)?

  2. How do subscription business models work?

  3. Why should sunk costs be ignored in future decision making?

  4. How is work in progress (WIP) typically measured in accounting?

  5. What is the difference between cost of equity and cost of capital?

  6. When are businesses required to use accrual accounting?

  7. What are some examples of how cash flows can be manipulated or distorted?

  8. How is it possible for a company to have a negative enterprise value?

  9. When is an expense ratio considered high and when is it considered low?

  10. How does transfer pricing affect managerial accounting?

  11. Is intellectual property considered a form of capital asset within a company?

  12. What is the difference between cash flow and EBIDTA?

  13. Why do analysts sometimes give an overweight recommendation on a stock?

  14. How do you calculate costs of capital when budgeting new projects?

  15. What is the average price-to-earnings ratio in the internet sector?

  16. How is cash flow affected by the average collection period?

  17. What is the difference between accrual accounting and cash accounting?

  18. What common growth rates should be analyzed when considering the future prospects of a company?

  19. How are fixed costs treated in cost accounting?

  20. What is the formula for calculating return on assets (ROA) in Excel?

  21. What are some common functions of business intelligence technologies?

  22. How does product pricing affect gross profit and EBITDA?

  23. What does the forward P/E indicate about a company?

  24. What is a bad interest coverage ratio?

  25. What causes dividends per share to decrease?

  26. How can an investor determine the efficiency of a company's working capital management?

  27. How long can accounts receivable be outstanding?

  28. How is terminal value discounted?

  29. What is the average profit margin for a company in the telecommunications sector?

  30. What is the average debt-to-equity ratio of wholesale sector companies?

  31. What's the difference between free cash flow to equity and accounting profits?

  32. How do I calculate the debt to equity ratio in Excel?

  33. What is the average profit margin for a company in the banking sector?

  34. What's the difference between return on sales (ROS) and operating margin?

  35. When can you trade the stocks in the Dow Jones Industrial Average (DJIA)?

  36. Which types of industries have the largest capital expenditures?

  37. What is the difference between ROCE and ROA?

  38. How do leverage ratios help to regulate how much banks lend or invest?

  39. In what situations does it benefit a company to buy back outstanding shares?

  40. What's the difference between a financial plan and a financial forecast?

  41. How does financial accounting differ from managerial accounting?

  42. What are some types of off-balance sheet assets?

  43. How do you calculate return on equity (ROE) in Excel?

  44. What can working capital be used for?

  45. What factors go into calculating social return on investment (SROI)?

  46. Why is Deferred Revenue Treated as a Liability?

  47. How do you calculate the variance in gross margin percentage due to price and cost?

  48. What are financial risk ratios and how are they used to measure risk?

  49. How do marketable securities impact a company's financial statements?

  50. How do equity financing and debt financing affect a company's financials?

  51. What is the formula for calculating the capital-to-risk-weighted assets ratio for a bank?

  52. How do you find the level of EBIT where EPS doesn't change?

  53. What does a high-times interest earned ratio signify for a company's future?

  54. What is the difference between marginal benefit and marginal cost?

  55. How do I perform a financial analysis using Excel?

  56. What is the average P/E ratio in the financial sector?

  57. What is considered a good working capital ratio?

  58. When should I use seasonally adjusted data from the consumer price index (CPI)?

  59. What is the average price-to-earnings ratio in the telecommunications sector?

  60. How do operating cash flow and net operating income differ?

  61. How do I calculate cost of goods sold (COGS) using the first in, first out (FIFO) method?

  62. What is the difference between the current account and the capital account?

  63. How do EBIT and cash flow from operating activities differ?

  64. What is price variance in cost accounting?

  65. How can a company raise its asset turnover ratio?

  66. What does the law of diminishing marginal utility explain?

  67. How do I calculate current liabilities in Excel?

  68. What is the average price-to-earnings ratio in the banking sector?

  69. What can shareholders vote on?

  70. How does debt affect a company's beta?

  71. What do you do if the intrinsic value of a stock is significantly lower than the market price?

  72. What does a low working capital ratio show about a company's working capital management?

  73. What are liquid assets, and why are they beneficial to a business?

  74. Which is better: A high or low equity multiplier?

  75. How does CAPEX differ from net working capital?

  76. What are the differences between percentage-of-completion and the completed contract method?

  77. What debt-to-equity ratio is common for a bank?

  78. How do I calculate dividend payout ratio from a balance sheet?

  79. What metrics can be used to evaluate companies in the financial services sector?

  80. What are the most common leverage ratios for evaluating a company?

  81. How is market to market accounting different from historical cost accounting?

  82. How does a company's capitalization structure affect its profitability?

  83. What is the difference between yield and dividend?

  84. How do you account for changes in the market value of various fixed assets?

  85. What financial ratios are best to evaluate for consumer packaged goods?

  86. How does a company obtain a bank guarantee?

  87. What is the formula for calculating gross national product (GDP)?

  88. What is a good interest coverage ratio?

  89. How can I use market capitalization to evaluate a stock?

  90. What are some strategies companies commonly use to reduce their debt-to-capital ratio?

  91. What is the difference between standard deviation and Z-score?

  92. What's the difference between outsourcing and subcontracting?

  93. How do you transfer common stock from one broker to another?

  94. How are operating expenses different from SG&A?

  95. What are some examples of companies or products that have outstanding brand equity?

  96. What are typical examples of capitalized costs within a company?

  97. Why is social responsibility important in marketing?

  98. How does inventory accounting differ between GAAP and IFRS?

  99. What are some examples of overhead treatment in cost accounting?

  100. What is the difference between GAAP and IFRS?

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