CFI FMVA COMPREHENSIVE EXAMINATION
TEST 2026 COMPLETE QUESTIONS AND
ANSWERS
◉ Which ratio would you use to determine the profitability of the goods
sold by a company. Answer: Gross profit margin
◉ When performing a vertical analysis which income statement item do
you use to determine the cost contribution for each expense category?
(What is the denominator?). Answer: Sales
◉ Horizontal analysis allows us to analyze performance over. Answer:
Time
◉ When calculating the quick ratio or "acid test" which current asset or
liability is omitted. Answer: Inventory
◉ For which organization would you expect to see the highest inventory
turnover ratio. Answer: Grocery retailer
◉ What actions could a company take to reduce its working capital
funding gap. Answer: Tighten customer credit terms
,◉ The debt to equity ratio indicates. Answer: The proportion of the
company financed by lenders versus owners
◉ Which of the following items are not included in working capital.
Answer: Short term investments
◉ When calculating turnover of property plant & equipment and
receivables, which item from the income statement do we use. Answer:
Sales
◉ If a company wanted to finance the purchase of equipment without
diluting shareholders equity, which of the following operation could it
consider. Answer: Obtaining a loan from a bank
◉ Working capital movement is included in which section of the cash
flow statement. Answer: Operating activities
◉ The debt to tangible net worth ratio is calculated as follows. Answer:
Interest Bearing Liabilities / (Equity - Intangible Assets)
◉ If the total assets to equity ratio of a company is increasing, it is
possible that. Answer: The company is increasing the use of debt and
getting higher financial leverage
,◉ Which ratio is not one of the three ratios that multiply together to
produce the return on equity ratio. Answer: Operating profit margin
◉ Which financial leverage ratio is used with two other ratios to
mathematically produce the return on equity ratio. Answer: Total Assets
/ Equity
◉ Which of the following is a tertiary ratio that drives profitability.
Answer: SG&A Expense / Sales
◉ Which ratios indicate how efficiently the company generates sales
from its assets. Answer: Working capital turnover
◉ The net profit margin ratio can mathematically be broken down as
"Tax impact x Capital structure impact x...". Answer: EBIT / Sales
◉ Based on the following information from ABC Company's financial
analysis, which one of the following statements is NOT true. Answer:
The company's ability to cover its short-term obligations is getting
higher over the five years.
◉ Which of the following best describes accounting principles in
general. Answer: They outline the fundamental rules and concepts and
establish the framework on which detailed accounting standards are
based.
, ◉ A sound accounting framework allows for all of the following benefits
except. Answer: Identical items being reported on the financial
statements of different companies
◉ Conservatism Principle. Answer: It provides guidance on how to
record transactions when there is uncertainty.
◉ Historical Cost Principle. Answer: It states that assets and liabilities
are recorded on the financial statements at the cost at which they were
acquired or assumed.
◉ Objectivity Principle. Answer: It states that financial statements must
be free from bias and based on verifiable evidence.
◉ Economic Entity Principle. Answer: It states that transactions carried
out by a business are separated from those conducted by its owner.
◉ Matching Principle. Answer: It states that the expenses of a business
should be recorded in the periods in which the corresponding revenues
are earned.
◉ On March 1st, Mr. Smithe signed up for a fitness program at Fit Co.
and paid $960 for the entire program upfront. The program includes a
total of 12 sessions and two sessions are delivered each month. How
TEST 2026 COMPLETE QUESTIONS AND
ANSWERS
◉ Which ratio would you use to determine the profitability of the goods
sold by a company. Answer: Gross profit margin
◉ When performing a vertical analysis which income statement item do
you use to determine the cost contribution for each expense category?
(What is the denominator?). Answer: Sales
◉ Horizontal analysis allows us to analyze performance over. Answer:
Time
◉ When calculating the quick ratio or "acid test" which current asset or
liability is omitted. Answer: Inventory
◉ For which organization would you expect to see the highest inventory
turnover ratio. Answer: Grocery retailer
◉ What actions could a company take to reduce its working capital
funding gap. Answer: Tighten customer credit terms
,◉ The debt to equity ratio indicates. Answer: The proportion of the
company financed by lenders versus owners
◉ Which of the following items are not included in working capital.
Answer: Short term investments
◉ When calculating turnover of property plant & equipment and
receivables, which item from the income statement do we use. Answer:
Sales
◉ If a company wanted to finance the purchase of equipment without
diluting shareholders equity, which of the following operation could it
consider. Answer: Obtaining a loan from a bank
◉ Working capital movement is included in which section of the cash
flow statement. Answer: Operating activities
◉ The debt to tangible net worth ratio is calculated as follows. Answer:
Interest Bearing Liabilities / (Equity - Intangible Assets)
◉ If the total assets to equity ratio of a company is increasing, it is
possible that. Answer: The company is increasing the use of debt and
getting higher financial leverage
,◉ Which ratio is not one of the three ratios that multiply together to
produce the return on equity ratio. Answer: Operating profit margin
◉ Which financial leverage ratio is used with two other ratios to
mathematically produce the return on equity ratio. Answer: Total Assets
/ Equity
◉ Which of the following is a tertiary ratio that drives profitability.
Answer: SG&A Expense / Sales
◉ Which ratios indicate how efficiently the company generates sales
from its assets. Answer: Working capital turnover
◉ The net profit margin ratio can mathematically be broken down as
"Tax impact x Capital structure impact x...". Answer: EBIT / Sales
◉ Based on the following information from ABC Company's financial
analysis, which one of the following statements is NOT true. Answer:
The company's ability to cover its short-term obligations is getting
higher over the five years.
◉ Which of the following best describes accounting principles in
general. Answer: They outline the fundamental rules and concepts and
establish the framework on which detailed accounting standards are
based.
, ◉ A sound accounting framework allows for all of the following benefits
except. Answer: Identical items being reported on the financial
statements of different companies
◉ Conservatism Principle. Answer: It provides guidance on how to
record transactions when there is uncertainty.
◉ Historical Cost Principle. Answer: It states that assets and liabilities
are recorded on the financial statements at the cost at which they were
acquired or assumed.
◉ Objectivity Principle. Answer: It states that financial statements must
be free from bias and based on verifiable evidence.
◉ Economic Entity Principle. Answer: It states that transactions carried
out by a business are separated from those conducted by its owner.
◉ Matching Principle. Answer: It states that the expenses of a business
should be recorded in the periods in which the corresponding revenues
are earned.
◉ On March 1st, Mr. Smithe signed up for a fitness program at Fit Co.
and paid $960 for the entire program upfront. The program includes a
total of 12 sessions and two sessions are delivered each month. How
