Exam (elaborations)
HBX CORE FINAL EXAM
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Exam of 10 pages for the course HBX CORE at HBX CORE (HBX CORE FINAL EXAM)
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HBX COREFINAL EXAM
Return on Investment (ROI) - Answers -The return or profit received as a result of
investing funds.
Not measured by the DuPont Framework.
Cash Conversion Cycle (CCC) - Answers -The number of days between when a
company pays for inventory purchases and when a company collects from customers.
Not measured by the DuPont Framework.
Interest Coverage Ratio - Answers -The number of times a company can cover its
interest expense only using its earnings before interest and tax.
Not part of the DuPont Framework.
Deferred Tax Asset - Answers -Arises when taxable income exceeds Income Before
Taxes due to a temporary timing difference.
When a deferred Tax Asset arises it means a company is recognizing Tax Expense now
on an amount of income that will be reflected in the financial records later.
Income Before Taxes - Answers -The amount shown on the Income Statement after all
expenses have been taken away from the revenue for the period but before any tax
expense for the period. May also be referred to as Pretax Profit.
, Profit Margin - Answers -(Net Income/Sales ) measures the ability of a company to
make a profit relative to revenue generated during a period. A Profit Margin of 19% tells
us that for every $100 in sales, $19 ended up in Net Income.
Net Present Value - Answers -Is a calculation of the present values of all the cash
inflows and outflows of a project or investment.
Excel formula =NPV(E4,B3:B12)+B2
Remember,for NPV you have to manually add the negative outflow from time zero
related to the initial investment.
Asset/Expense Accounts - Answers -Asset and expense accounts increase with debit
and decrease with credit.
Income Statement - Answers -Shows a company's financial performance, because it
shows the accumulation of all nominal accounts over a period of time.
Gross Profit - Answers -Sales Revenue minus COGS.
Accounts Payable Turnover - Answers -Credit Purchases/Average Accounts Payable
Balance.
Internal Rate of Return (IRR) - Answers -The discount rate that sets the net present
value (NPV) of a project equal to zero. The IRR allows us to find the percentage rate
that would be earned for a given set of cash flows.
Gross Profit Margin Calculation - Answers -Gross Profit/Revenue =Gross Profit Margin
Leverage Ratio Calculation - Answers -Average Total Assets/Average Equity.
Suggested Formula =Average (B11,D5)/Average (Sum(B16:B18),D8).
Present Value Calculation - Answers -It is calculated by multiplying the annual payment
by the present value of an annuity factor.
$18,000*6.71008=$120,781
Return on Equity (ROE) - Answers -The return that a business generates during a
period on equity invested in the business by the owners of the business.
Measured in DuPont Framework.
Profit Margin - Answers -Profit Margin (Net Income/Sales) measures the ability of a
company to make a profit relative to revenue generated during a period.
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