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Quiz: How Well Do You Speak CFO?

By Dennis McCafferty on 2011-03-22


Think you have what it takes to go toe-to-toe with your CFO in a jargon-filled smackdown? Take our quiz and see if you're really a master of financial doublespeak. If not, take heart, for you are far from alone. There's probably a lot your CFO is not telling you. And, many a head spins in meetings as the CFO intentionally tosses about obscure financial terms, and then acts as if anyone with half a brain should know what he means. In an unguarded moment, you may have even gotten your CEO to confess that he simply nods his head during such moments and pretends to know what’s going on. Fortunately, hundreds of CFO-isms has been compiled into one book, The Essentials of Finance and Accounting for Nonfinancial Managers (Amacom/Available now). Author Edward Fields demystifies the bewildering, universal language in which all finance types seem to take delight. Before long, you’ll have your CFO gasping at your knowledge of GAAP (Generally Accepted Accounting Principles) and grooving to your command of OM (Operating Margin). Our quiz is based on the financial phrases, practices and concepts explored in the book.

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What is this?


This practice is designed to ensure that information presented -- such as that to business officers -- is true.

Answer


Due diligence. Warning: We start you out with an easy one here.

What is this?


An accounting mechanism that provides information needed to determine how much it costs a company to produce its products.

Answer


Standard cost system

What is this?


The “Three Cs of Credit.”

Answer Capacity, Collateral, Character.


These are traditional criteria used by bankers to evaluate a loan application.

What is this?


A financial statement that incorporates information other than actual accounting information.

Answer


Pro forma statement

What is this?


This concept requires a company to rethink and reevaluate how it conducts business, often outsourcing low-priority resource-consuming activities to concentrate on core competencies.

Answer


Zero-based budgeting

What is this?


A loan with no fixed maturity.

Answer


Demand loan. This means the lender may demand funds from borrower without notice or reason.

What is this?


This finance and banking term means 1/100th of one percent.

Answer


Basis point

What is this?


This finance and banking term means 1/100th of one percent.

Answer


Retained earnings

What is this?


The minimum ROI that a business requires before it will approve a capital expenditure proposal.

Answer


Hurdle rate

What is this?


This ratio assists management in assessing the company’s liquidity position.

Answer


Quick ratio. For the record, that ratio is cash plus marketable securities plus accounts receivable divided by accounts payable plus bank debt. Bet you already knew that, right?

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