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Kevin Cope

Test Your Business Acumen

1. Only about 35% of startups make it 5 years. What is the number 1 reason that companies fail?

They choose bad business locations

They underestimate their cash needs

They fail to create an innovative product or service

They have poor customer service

2. Which of the following scenarios NEGATIVELY impacts cash flow?

John incentivizes his sales team to hit their quota faster than last quarter while maintaining current pricing

Joanne researches different paper suppliers to find a cheaper vendor who provides equal services

Maria renegotiates a vendor contract to extend payment by 15 days

Yolanda calls to find out why customers are past due on their payments

Joseph pays invoices before they're due so he can focus on other work

3. You are the CEO of your company. Which of the following methods of generating cash flow would you prefer the most?

You sell one of your office buildings for $100,000

You get investors to put $100,000 into the business

You generate $100,000 from operating activities

You sell of unused assets for $100,000

You find $20 in a pair of old jeans

4. What is the difference between profit and cash flow?

Profit is generally recorded when the sale is made and cash flow is recorded when the money is received

Cash flow is generally recorded when the sale is made and profit is recorded when the money is received

Cash flow is the inflows & outflows of money over a period of time and profit is the cash a company has on hand

Profit is the inflows & outflows of money over a period of time and cash flow is the cash a company has on hand

There is no difference between profit and cash flow

5. You are an employee for ACME Company. Which of the following is NOT a way you can help increase company profits?

You accelerate your accounts payable so that you pay them off before they are due

You up-sell to your customers where it makes sense

You research the market and find a supplier with similar quality materials for a cheaper price

You raise the price of a product while continuing to sell the same amount of units

All of the above are ways to increase a company's profits

6. You are an employee at Apple and have the responsibility of managing the inventory in your local retail store. Which of the following is NOT considered a challenge of having excess inventory?

Inventory carrying costs

The inventory can become obsolete or outdated

Customers don't like it

Inventory shrinkage

It ties up cash

7. Which of the following is NOT considered a sign of a company growing too fast

Declining Cash

Declining Profits

Declining Revenues

Declining Asset Strength

Declining Service

8. You work at ACME Company and your CEO says that the company is going to focus on growing its revenues inorganically. This could mean...

ACME is going to focus on selling more of its products

ACME is going to open more stores

ACME is going to acquire another company

ACME is going to enter new geographical markets

9. What is the one thing that is hardest to replicate in a company?

A company's strategy

A company's product

A company's culture

A company's structure

10. Use the simple income statement below to calculate the company's Net Profit Margin

Total Revenue - $100
Cost of Goods Sold - $67
Gross Profit - $33
Operating Expenses - $20
Operating Income - $13
Interest & Taxes - $3
Net Income - $10

33%

13%

10%

3%

11. Given the following financial information, calculate the company's Return on Assets

Total Revenue - $500
Gross Profit - $200
Net Income - $100
Total Current Assets - $400
Total Assets - $800

6.25%

8%

12.5%

15%

25%

Ready to improve your business acumen?

Hopefully these questions give you an idea of what you will learn as you take the course. Building your business acumen is a lifelong process and our goal is to give you the foundaton you need to continue that process throughout your career – so the next time you find yourself faced with a complex business challenge, you'll have the tools to succeed.

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