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CFI CBCA Core Course Assessment Questions And All Actual Answers.

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What is the main goal of using business writing fundamentals? - Answer To reduce mental effort Which of the following statements describes a "Capacity" strength or weakness for a company in the 5 Cs of credit framework? - Answer The net profit margin ratio is high. Which of the followin...

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CFI CBCA Core Course Assessment
Questions And All Actual Answers.
What is the main goal of using business writing fundamentals? - Answer To reduce mental effort



Which of the following statements describes a "Capacity" strength or weakness for a company in the 5
Cs of credit framework? - Answer The net profit margin ratio is high.



Which of the following statements describes a "Condition" strength or weakness for a company in the 5
Cs of credit framework? - Answer The risks associated with the industry are high.



Which of the following scenarios would NOT be considered a strength when assessing the management
team as part of evaluating a company's character? - Answer Financial reports are not widely shared
and performance measures have not been identified.



Which of the following ratios most likely indicates strong "Capacity" for a company? - Answer High
asset turnover ratio



Select the correct formula to calculate the operating margin ratio. - Answer Operating Margin Ratio =
EBIT / Revenue



Select the correct formula to calculate the inventory turnover ratio. - Answer Inventory Turnover Ratio
= Cost of Goods Sold / Average Inventory



Which of the following most likely indicates strong "Capital" for a company? - Answer Unutilized lines
of credit or loans



Which of the following statements on collateral is NOT correct? - Answer Collateral can be used as the
main determinant of a credit decision.



Which of the following tools or methods is used to assess the general business environment? - Answer
PEST analysis

,Select the loan contract with the lowest risk. - Answer A demand loan with monthly payments secured
by assets



Which is not one of the three main financial statements? - Answer Statement of equity



What does the balance sheet indicate? - Answer The financial strength of the business



Financing activities - Answer Issuing shares and bonds



Operating activities - Answer Payments to suppliers; Depreciation and amortization expense



Investing activities - Answer Buying and selling equipment



Which is not a section in the financial statement note disclosures? - Answer Management discussion
and analysis



Balance Sheet - Answer Retained earnings; Share captial



Income Statement - Answer Rent expense



Cash Flow Statement - Answer Sale of property, plant and equipment



If a company has net assets equal to $3.25 million but is sold for $5.35 million, how much goodwill does
the acquirer record on their balance sheet? - Answer $2.1 million



Intangible assets - Answer Items of value, which have no physical substance, that are used to generate
revenues



Authorized shares - Answer The total number of shares a company can sell

, Contingencies - Answer Events that may or may not happen, depending on certain circumstances



Commitments - Answer Future obligations that a company has agreed to



If a company issues 60,000 shares at $0.25 each but the shares have a par value of $0.20 each, what is
the resulting contributed surplus? - Answer $3,000



What line item is not found in the statement of shareholders' equity? - Answer Debt issued or
repurchased



What is not true about a partnership? - Answer Partners cannot be held liable for a debt



Which line item usually accounts for direct labor? - Answer Cost of goods sold



Select the statements below which are true. Select all that apply. - Answer Depreciation and
amortization are non-cash expenses; A company can be profitable but experience negative cash flows



What are the 4 types of audit opinions? - Answer Adverse, unqualified, qualified, and disclaimer of
opinion



Which of the following statements regarding a review engagement is false? - Answer A review
engagement is used for financial statements prepared for internal use



Select the following key lending ratios used to evaluate the financial capacity of a business (select all that
apply). - Answer Debt to equity ratio; Working capital ratio



Which of the following tools is NOT used to analyze a company? - Answer Porter's five forces



Which of the following tools are used to analyze a company? - Answer Firm lifecycle, Ansoff's matrix,
SWOT analysis

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