Financial Terms and Calculations Quiz

What is the formula for calculating Earnings Per Share (EPS)?

• Net Income / Number of Shares Outstanding

• Dividends / Market Price

• Market Price / Dividends

• Number of Shares Outstanding / Net Income

What does EPS stand for in financial terms?

• Earnings Per Share

• Earnings Per Stock

• Earnings Per Sale

• Earnings Per Second

What is the relationship between dividends per share and market price per share called?

• Dividend Yield

• Earnings Ratio

• Market Share

• Income Stock

Why might investors buy stocks in companies with high dividend yields?

• To seek a constant income

• To increase market volatility

• To reduce stock prices

• To avoid taxes

What is the price-earnings ratio?

• The ratio of market price per share to earnings per share

• The ratio of earnings per share to market price per share

• The ratio of total assets to total liabilities

• The ratio of net income to total revenue

What does the price-earnings ratio measure?

• The price of a company's stock relative to its earnings

• The total revenue of a company

• The number of shares a company has

• The total expenses of a company

What is a liquidity ratio used for?

• To measure a business's ability to pay its current financial obligations

• To determine the market value of a company's stock

• To calculate the total revenue of a company

• To find the number of employees in a company

Why must a business have adequate financial resources according to the text?

• To buy additional merchandise and pay employees

• To increase the number of shareholders

• To reduce the market price of its stock

• To expand its office space

What is working capital?

• The total amount of a company's assets

• The amount of current assets less current liabilities

• The total amount of a company's liabilities

• The amount of cash a company has

Why is working capital important for a business?

• It determines the company's profit

• It measures the financial resources available for daily operations

• It shows the company's total debt

• It indicates the company's market value