A company has current assets of $300,000 and current liabilities of $150,000. What is its current ratio?Saylor Academy open textbook Managerial Accounting, section 13.3 Ratio Analysis of Financial Information. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), b. Ratio analysis
A corporation has taxable income of $200,000. At the federal corporate rate, how much income tax does it figure?Internal Revenue Service, Publication 542, Corporations, Figuring Tax: Tax Rates. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), c. Taxes
A firm has a profit margin of 10%, an asset turnover of 1.5 and an equity multiplier of 2. Under the DuPont formula, what is its return on equity?Wikipedia, DuPont analysis. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), b. Ratio analysis
A firm has total assets of $500,000 and total liabilities of $300,000. What is its equity?Saylor Academy open textbook Personal Finance, section 3.1 Accounting and Financial Statements. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), a. Fundamentals of financial statements
Show all 50 questions (46 more)
Financial statements and planning, continued
Net income is $50,000 on net sales of $500,000. What is the profit margin ratio?Saylor Academy open textbook Managerial Accounting, section 13.3 Ratio Analysis of Financial Information. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), b. Ratio analysis
The statement of cash flows sorts cash receipts and cash payments into which three kinds of activities?Saylor Academy open textbook Managerial Accounting, section 12.1 Purpose of the Statement of Cash Flows. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), a. Fundamentals of financial statements
Total liabilities are $600,000 and total shareholders' equity is $400,000. What is the debt to equity ratio?Saylor Academy open textbook Managerial Accounting, section 13.3 Ratio Analysis of Financial Information. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), b. Ratio analysis
What does a marginal tax rate measure?Wikipedia, Tax rate. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), c. Taxes
Which financial statement lists assets, liabilities and equity with their values?Saylor Academy open textbook Personal Finance, section 3.1 Accounting and Financial Statements. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), a. Fundamentals of financial statements
Which financial statement summarizes income and expenses for a period and shows the net profit or loss?Saylor Academy open textbook Personal Finance, section 3.1 Accounting and Financial Statements. Written to the DSST Principles of Finance outline, I. Financial Statements and Planning (20%), a. Fundamentals of financial statements
Time value of money 10
$1,000 is invested at 5% a year, compounded annually. What is it worth after 2 years?Saylor Academy open textbook Personal Finance, section 4.2 Calculating the Relationship of Time and Value. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), b. Future value (lump sum)
A fixed sum is due in five years. If the discount rate rises, what happens to its present value?Saylor Academy open textbook Personal Finance, section 4.2 Calculating the Relationship of Time and Value. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), a. Present value (lump sum)
A loan has a nominal annual rate of 12%, compounded twice a year. What is its effective annual rate?Wikipedia, Effective interest rate. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), d. Interest rate calculations
How does an annual percentage rate (APR) on a loan differ from its interest rate?Consumer Financial Protection Bureau, What is the difference between a mortgage interest rate and an APR?. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), d. Interest rate calculations
How does an annuity due differ from an ordinary annuity?Wikipedia, Annuity. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), c. Annuity due versus ordinary annuity
Three deposits of $1,000 are made at the end of each of three years and earn 10% a year. What is the balance right after the third deposit?Saylor Academy open textbook Personal Finance, section 4.2 Calculating the Relationship of Time and Value. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), b. Future value (annuity)
Two deposits of $100 are made one year apart, the first one today, and earn 10% a year. What is the balance two years from today?Saylor Academy open textbook Personal Finance, section 4.2 Calculating the Relationship of Time and Value. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), c. Annuity due versus ordinary annuity
What is a perpetuity?Saylor Academy open textbook Personal Finance, section 4.3 Valuing a Series of Cash Flows. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), a. Present value (annuity)
What is an annuity?Saylor Academy open textbook Personal Finance, section 4.3 Valuing a Series of Cash Flows. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), a. Present value (annuity)
What is the present value of $1,210 to be received in 2 years, at a discount rate of 10% a year?Saylor Academy open textbook Personal Finance, section 4.2 Calculating the Relationship of Time and Value. Written to the DSST Principles of Finance outline, II. Time Value of Money (20%), a. Present value (lump sum)
Working capital management 5
A business with seasonal income wants to see in which months it risks running out of cash. Which tool shows this?Saylor Academy open textbook Personal Finance, section 5.3 The Cash Budget and Other Specialized Budgets. Written to the DSST Principles of Finance outline, III. Working Capital Management (10%), c. Cash budget
A supplier lets a store take goods now and pay for them in 30 days. Which short-term source of funds is the store using?Wikipedia, Trade credit. Written to the DSST Principles of Finance outline, III. Working Capital Management (10%), a. Short-term sources of funds
Credit sales for the year are $730,000 and average accounts receivable are $100,000. What is the average collection period?Saylor Academy open textbook Managerial Accounting, section 13.3 Ratio Analysis of Financial Information. Written to the DSST Principles of Finance outline, III. Working Capital Management (10%), b. Management of short-term assets and liabilities
Current assets are $800,000 and current liabilities are $500,000. What is the firm's working capital?Wikipedia, Working capital. Written to the DSST Principles of Finance outline, III. Working Capital Management (10%), b. Management of short-term assets and liabilities
What is commercial paper?Wikipedia, Commercial paper. Written to the DSST Principles of Finance outline, III. Working Capital Management (10%), a. Short-term sources of funds
Stocks and bonds 4
A bond's face value is $1,000 and its coupon rate is 6%, paid twice a year. How much is each coupon payment?Saylor Academy open textbook Personal Finance, section 16.1 Bonds and Bond Markets. Written to the DSST Principles of Finance outline, IV. Valuation and Characteristics of Stocks and Bonds (8%), a. Bonds
How do preferred stockholders usually differ from common stockholders?U.S. Securities and Exchange Commission, Investor.gov, Stocks. Written to the DSST Principles of Finance outline, IV. Valuation and Characteristics of Stocks and Bonds (8%), b. Common stock and preferred stock
In the United States, what is a debenture?Wikipedia, Debenture. Written to the DSST Principles of Finance outline, IV. Valuation and Characteristics of Stocks and Bonds (8%), a. Bonds
What is the purpose of a sinking fund attached to a bond issue?Wikipedia, Sinking fund. Written to the DSST Principles of Finance outline, IV. Valuation and Characteristics of Stocks and Bonds (8%), a. Bonds
Capital budgeting 6
A machine costs $50,000 today. The present value of the cash it will bring in is $52,000. What is the net present value, and what does the NPV rule say?Saylor Academy open textbook Managerial Accounting, section 8.2 Net Present Value. Written to the DSST Principles of Finance outline, V. Capital Budgeting (12%), c. Financial analysis tools
A manager changes one input at a time, such as the sales price or fixed costs, to see how profit responds. What is this called?Saylor Academy open textbook Managerial Accounting, section 6.3 Using Cost-Volume-Profit Models for Sensitivity Analysis. Written to the DSST Principles of Finance outline, V. Capital Budgeting (12%), d. Break even and sensitivity analysis
A project costs $40,000 and brings in $10,000 of cash each year. What is its payback period?Saylor Academy open textbook Managerial Accounting, section 8.5 The Payback Method. Written to the DSST Principles of Finance outline, V. Capital Budgeting (12%), c. Financial analysis tools
A project earns an average profit of $12,000 a year on an average investment of $80,000. What is its accounting rate of return?Wikipedia, Accounting rate of return. Written to the DSST Principles of Finance outline, V. Capital Budgeting (12%), c. Financial analysis tools
Fixed costs are $60,000 a year. Each unit sells for $50 and has a variable cost of $30. How many units of sales reach the break-even point?Saylor Academy open textbook Managerial Accounting, section 6.1 Cost-Volume-Profit Analysis for Single-Product Companies. Written to the DSST Principles of Finance outline, V. Capital Budgeting (12%), d. Break even and sensitivity analysis
How is the internal rate of return (IRR) of an investment defined?Saylor Academy open textbook Managerial Accounting, section 8.3 The Internal Rate of Return. Written to the DSST Principles of Finance outline, V. Capital Budgeting (12%), c. Financial analysis tools
Cost of capital 5
A firm borrows at 8% and its tax rate is 25%. What is its after-tax cost of debt?Wikipedia, Weighted average cost of capital. Written to the DSST Principles of Finance outline, VI. Cost of Capital (11%), a. Cost of debt
A firm is financed 60% by equity that costs 10% and 40% by debt with an after-tax cost of 5%. What is its weighted average cost of capital?Wikipedia, Weighted average cost of capital. Written to the DSST Principles of Finance outline, VI. Cost of Capital (11%), c. Weighted average cost of capital
A proposed project carries more risk than the firm's average project. Compared with the cost of capital, what required rate of return should be used to evaluate it?Saylor Academy open textbook Managerial Accounting, section 8.2 Net Present Value. Written to the DSST Principles of Finance outline, VI. Cost of Capital (11%), c. Weighted average cost of capital
The risk-free rate is 3%, the market risk premium is 6% and a stock's beta is 1.5. Using the capital asset pricing model, what is the cost of equity?Wikipedia, Security market line. Written to the DSST Principles of Finance outline, VI. Cost of Capital (11%), b. Cost of equity
What does a firm's cost of capital represent?Saylor Academy open textbook Managerial Accounting, section 8.2 Net Present Value. Written to the DSST Principles of Finance outline, VI. Cost of Capital (11%), c. Weighted average cost of capital
Risk and return 6
A bond pays a nominal interest rate of 7% while inflation runs at 3%. By the Fisher equation, what is the real interest rate?Saylor Academy open textbook Money and Banking, section 4.7 Inflation and Interest Rates. Written to the DSST Principles of Finance outline, VII. Risk and Return (12%), c. Determinants of interest rates
A stock returned 10%, −5% and 13% in the last three years. Taking the average as the expected return, what is the expected return?Saylor Academy open textbook Personal Finance, section 12.3 Measuring Return and Risk. Written to the DSST Principles of Finance outline, VII. Risk and Return (12%), a. Expected return on an asset and a portfolio
An investor spreads money over many different companies. Which risk does this diversification reduce?Saylor Academy open textbook Personal Finance, section 12.4 Diversification: Return with Less Risk. Written to the DSST Principles of Finance outline, VII. Risk and Return (12%), e. Diversification
In finance, what does the standard deviation of an investment's returns measure?Saylor Academy open textbook Personal Finance, section 12.3 Measuring Return and Risk. Written to the DSST Principles of Finance outline, VII. Risk and Return (12%), b. Measures of risk
On the security market line, what is the slope equal to?Wikipedia, Security market line. Written to the DSST Principles of Finance outline, VII. Risk and Return (12%), d. Capital Asset Pricing Model and Security Market Line
What does a stock's beta measure?Wikipedia, Beta (finance). Written to the DSST Principles of Finance outline, VII. Risk and Return (12%), b. Measures of risk
International financial management 4
A foreign government seizes a company's factory without paying for it. Which kind of risk is this?Wikipedia, Political risk. Written to the DSST Principles of Finance outline, VIII. International Financial Management (7%), b. Currency risk and political risk
An importer must pay a bill in yen in 90 days and signs a forward contract today to fix the exchange rate. What is this called, and what does the importer give up?Saylor Academy open textbook International Finance: Theory and Policy, section 4.2 Exchange Rate: Definitions. Written to the DSST Principles of Finance outline, VIII. International Financial Management (7%), c. Tools
The U.S. dollar appreciates against the euro. What happens to goods made in the United States and sold in the euro zone?Saylor Academy open textbook Money and Banking, section 18.1 The Economic Importance of Currency Markets. Written to the DSST Principles of Finance outline, VIII. International Financial Management (7%), a. Impact of exchange rates on international financial markets
What is the spot exchange rate?Saylor Academy open textbook International Finance: Theory and Policy, section 4.2 Exchange Rate: Definitions. Written to the DSST Principles of Finance outline, VIII. International Financial Management (7%), c. Tools
How this list was compiled: Our own questions, written to the exam content outline in the DSST fact sheet for Principles of Finance (Prometric, Rev 11/2021, https://getcollegecredit.com/wp-content/uploads/2022/09/DSST_PrinciplesofFinance.pdf, read 2026-10-08): Financial Statements and Planning 20%, Time Value of Money 20%, Working Capital Management 10%, Valuation and Characteristics of Stocks and Bonds 8%, Capital Budgeting 12%, Cost of Capital 11%, Risk and Return 12%, International Financial Management 7%. This bank holds 50: 10, 10, 5, 4, 6, 5, 6 and 4. Every definition and formula was read on the public page named under its question, each opened 2026-10-08: the Saylor Academy open textbooks Managerial Accounting, Personal Finance, Money and Banking and International Finance: Theory and Policy, IRS Publication 542, Investor.gov, the Consumer Financial Protection Bureau and Wikipedia. 23 answers are arithmetic on the numbers the question prints, worked out again. Licence: Questions, choices and explanations are original work of this site.
How it works
This DSST Principles of Finance practice test has 50 questions of our own in the fact sheet's eight areas. It is unofficial and is not affiliated with, endorsed by or sponsored by Prometric, the owner of the DSST exams.
Read the full guide
What the exam covers
The fact sheet (Rev 11/2021) lists eight areas: financial statements and planning 20%, time value of money 20%, working capital management 10%, stocks and bonds 8%, capital budgeting 12%, cost of capital 11%, risk and return 12%, and international financial management 7%. The bank holds 10, 10, 5, 4, 6, 5, 6 and 4.
Length and timing
On test day there are 100 questions and 2 hours. Exam mode gives 60 minutes for 50.
How the math is written
Rates are annual unless a question says otherwise, and (1 + r)^t means 1 + r raised to the power t. Each calculation is worked in the explanation.
Time value of money and financial statements are 40% of the exam between them, so start there.
Ratios come as plain division: current ratio, debt to equity, profit margin, and the three-part DuPont formula for return on equity.
Questions and answers
Is there a DSST Principles of Finance study guide?
The free one is Prometric's fact sheet: the content outline and two reference textbooks. Here each explanation names the public page its formula was read on, so a missed question tells you what to read.
Can you use a calculator on the DSST Principles of Finance exam?
Yes. The exam's page on the DSST site says a nonprogrammable calculator may be used during this exam. The numbers on this page are chosen so that each answer can also be worked by hand.
What score do you need on the DSST Principles of Finance exam?
There is no percent to aim for. The American Council on Education recommends 3 semester hours of lower-level baccalaureate credit at a score of 400, and your school decides which score it accepts.
Are these real DSST Principles of Finance questions?
No. Every question was written for this site from the lines of the published outline. None is copied or reworded from a real exam or from the fact sheet's samples, and a score here does not predict a score there.