Sports Finance Study Guide

Which ratio measures how often an organization sells and replaces its inventory over a specified period of time? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e. Debt ratio

d. Inventory turnover ratio

An estimation of an organization's worth according to the stock market is __________. a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio

d. Market value

In its policies regarding deferred salaries, which of the following leagues has stated that deferred payments must be placed by the team in a league fund for administration and future disbursement? a. National Basketball Association b. Major League Soccer c. National Hockey League d. National Football League e. Major League Baseball

d. National Football League

Which ratio measures how an organization finances its operation with debt and equity? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e. Debt ratio

e. Debt ratio

What is a measure of risk or uncertainty of time? a. Inflation rate b. Interest rate c. Business activity rate d. Development rate e. Discount rate

e. Discount rate

This type of financing includes charitable donations, either cash or in-kind, made to an organization and is the primary source or operating and investing income for major collegiate sports programs. a. Debt b. Equity c. Retained earnings d. Government e. Gift

e. Gift

Which of the following is an estimate of how much money investors will pay for each dollar of the organization's earnings? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio

e. Price-to-earnings ratio

Gift financing is a minor source of operating income for major collegiate sports programs.

False

Risk of time means that risk decreases as the length of time funds are invested increases.

False

When comparing the MLB, NBA, and the NHL, the NBA as a league has the most risk.

False

Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time? a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above

a. Balance sheet

Which ratio is an indication of whether an organization can meet its current liabilities―those due within a year―with its current assets? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e. Debt ratio

a. Current ratio

When an organization borrows money that must be paid back over time, usually with interest, what kind of financing is being used? a. Debt b. Equity c. Retained earnings d. Government e. Gift

a. Debt

Which of the following is calculated by investigating changes in the Consumer Price Index (CPI)? a. Inflation rate b. Interest rate c. Business activity rate d. Development rate e. Discount rate

a. Inflation rate

Risk increases as the length of time funds are invested increases. What is this known as? a. Risk of time b. Level of risk c. Risk premium d. Liquidity premium e. None of the above

a. Risk of time

The art and science of managing money, including applications of concepts from accounting, economics, and statistics is the definition of a. Retained earnings b. Derivative trading c. Finance d. Sustainability e. Economic cycle

c. Finance

Which of the following is a series of payments made forever into the future? a. Annuity b. Infinite annuity c. Perpetuity d. Inflation rate e. Infinite cash flow

c. Perpetuity

Which of the following measures the return rate an organization's owners or shareholders are receiving on their investments? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio

c. Return on equity

Which financial statement tracks cash in and cash out of an organization over a specified period of time? a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above

c. Statement of cash flows

___________ is the market value of a nation's output of sport-related goods and services in a given year. a. Equity financing b. Gross Domestic Sports Product (GDSP) c. Direct facility financing d. NAICS 71 e. None of the above

b. Gross Domestic Sports Product (GDSP)

The __________ shows the organization's income over a specified period of time. a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above

b. Income statement

What is determined by comparing the risk of one asset to another? a. Risk of time b. Level of risk c. Risk premium d. Liquidity premium e. None of the above

b. Level of risk

Which of the following is a profitability ratio that measures the percentage of an organization's total sales or revenues that was net profit or income? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio

b. Net profit margin

Which of the following refers to the purchasing power of a dollar? a. Nominal value b. Real value c. Future value d. Present value e. None of the above

b. Real value

Which of the following is today's value of a future cash flow? a. Nominal value b. Real value c. Future value d. Present value e. None of the above

d. Present value

By holding multiple assets, an investor can eliminate some the risk associated with stand-alone assets.

True

Given two investment possibilities with the same expected rate of return, most investors would choose the investment with less risk.

True

NFL players' contracts are not guaranteed.

True

Risk measures that chance that some unfavorable event will occur.

True

Risk-free investments are short term investments deemed to have no chance of loss.

True

The Gross Domestic Sports Product (GDSP) is the market value of a nation's output of sport-related goods and services in a given year.

True

The sport industry relies on the discretionary income of spectators and participants.

True

A series of equal payments or receipts made at any interval of time is referred to as which of the following? a. Cash inflow b. Cash outflow c. Annuity d. Lump sum e. None of the above

c. Annuity