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CLFP EXAM (Credit Process and Financial Statement) with Questions & Answers Graded A
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CLFP EXAM (Credit Process and Financial Statement) with Questions & Answers Graded A
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CLFP EXAM (Credit Process andFinancial Statement) with Questions &
Answers Graded A
What is an Association? - ✔✔1.) Used by organizations not in commercial enterprise
2.) Usually non-profit
3.) Few assets
4.) If leasing, must be approved in bylaws with instructions on who is authroized
What is a Trust? - ✔✔1.) formed to hold an asset for benefit of others;
2.) Trust agreement should be reviewed prior to lending to determine relevant parties and who
is authorized to sign
What are the characteristics of a Municipality? - ✔✔1.) local or government entity (city, state
etc.) 2.) Use "fund accounting"
3.) Issue their own budget and financials
4.) Income typically consists of taxes
5.) "fund balance" equivalent of equity in business
6.) Typically, cannot commit to leases more than a year
7.) Longer term leases have "fiscal funding class" or "non-appropriation" language allowing them to
cancel.
What are the characteristics of a Federal Government lease? - ✔✔1.) can borrow money based
on congressional laws
2.) typically does not obligate long term
3.) May use long term bonds to fund
, 4.) different agencies use different methods
Describe a common financial analysis process - ✔✔1.) Spread statements with common size
assets, liabilities and expenses;
2.) projected balance sheet with impact of new detbt
3.) Income statement review with notes on key items
4.) Interim statement analysis - be aware of seasonality
5.) Cash flow calc
6.) Cash throw-off
7.) reconcillation of net worth
8). key ratio analysis
What should you look for when recon Net Worth? - ✔✔[Total Net Worth Previous Year] +
[Net Income This Year (after tax, div, dist)] = [Total Net Worth This Year]
What are key financial analysis considerations? - ✔✔1.) earnings stability of company
2.) earnings stability of industry
3.) Kind of assets
4.) Liquidity
5.) Debt Maturities and related impact
6.) Purpose of debt
7.) Interest expense
8.) Contingent liabilities
9) Capital structure and solvency
10.) Cash flow coveage
What does the Risk Management Association (RMA) offer? - ✔✔1.) industry average financial
ratios 2.) compiled with data from commercial banks
3.) companies that do not need or qualify for bank financing are excluded
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