CFI CBCA FINAL EXAM QUESTIONS
WITH CORRECT SOLUTIONS||100%
GUARNTEED PASS||UPDATED
2026/2027 SYLLABUS||A+
GRADED||<<RECENT VERSION>>
Which of the following is NOT a benefit of including covenants in a loan
agreement? - ANSWER ✓ Covenants protect lenders by reducing their financial
loss in the event of default.
Which of the following is a benefit of including covenants in a loan agreement? -
ANSWER ✓ Covenants restrict borrowers from taking actions that can increase
the risk for the lenders; Covenants provide borrowers with clear expectations of the
lenders; Covenants reduce the cost of borrowing because lenders are more willing
to provide a lower interest rate when they can impose restrictions.
Select ALL the non-financial covenants from the list. - ANSWER ✓ The company
cannot change its business operations; The company must maintain minimum
insurance coverage of 2 million.
Select the correct formula to calculate the quick ratio. - ANSWER ✓ Quick Ratio
= (Cash & Equivalents + Marketable Securities + Accounts Receivable) / Current
Liabilities
Select the correct formula to calculate the working capital ratio. - ANSWER ✓
Working Capital Ratio = Current Assets / Current Liabilities
Which of the following scenarios is most likely to indicate high lending risk? -
ANSWER ✓ Low interest coverage ratio
What is the best next step when there is a breach of a loan covenant? - ANSWER
✓ Investigate why the breach happened
, Calculate debt service coverage ratio (using EBITDA instead of EBIT) based on
the company's financial information below:
Net Operating Profit: 12,000
Depreciation & Amortization: 2,000
Accounts Payable: 2,000
Line of Credit: 2,500
Current Portion of Long-Term Debt: 3,000
Interest Expense: 800 - ANSWER ✓ = 2.2 = 12,000+2,000/(2,500+3,000+800)
Calculate funded debt to EBITDA ratio based on the company's financial
information below:
Net Operating Profit: 12,000
Depreciation & Amortization: 2,000
Accounts payable: 2,000
Line of Credit: 2,500
Current Portion of Long-Term Debt: 3,000
Non-Current Portion of Long-Term Debt: 15,000 - ANSWER ✓ = 1.5 =
(15,000+3,000+2,500)/(12,000+2,000)
If a company takes out a 5-year equally amortizing loan of 20,000, and 6 months
later purchases equipment with that loan, what will happen to its financial
statements? - ANSWER ✓ Current portion of long-term debt will increase by
4,000.
Monitoring - ANSWER ✓ It involves determining new level of credit risk
associated with a borrower.
Documentation - ANSWER ✓ It provides timely, relevant and thorough
information for loan approval, security and monitoring.
Re-classifying - ANSWER ✓ It involves undertaking regular reviews of a
borrower's financial statements and evaluating changes in a borrower's business.
Which of the following statements is NOT true about credit administration? -
ANSWER ✓ Credit administration is about documentation, ongoing monitoring,
and possibly re-classifying a borrower before a loan has been made.
, Which of the following statements are true about credit administration? -
ANSWER ✓ Appropriate credit administration and documentation practices allow
for better information for more informed decision regarding actions taken towards
a borrower's account.
Proper credit documentation practices allow for more flexibility to respond to
changes in a borrower's circumstances.
Credit administration is important for identifying problems in a borrower's account
and reducing the risk of credit default.
Loan approval documentation - ANSWER ✓ Term sheet, loan agreement,
commitment letter
Monitoring documentation - ANSWER ✓ Annual review; monthly/quarterly
report
Which of the following is the correct order of documentation submission in the
loan approval process? - ANSWER ✓ Loan application -> Term sheet ->
Commitment letter -> Loan agreement
What is a term sheet? - ANSWER ✓ A non-binding agreement given to the
borrower that summarizes primary terms including the interest rate, time to
maturity, and security.
What are covenants? - ANSWER ✓ Clauses in a loan agreement outlining what a
borrower must maintain or what they are restricted from doing.
Which of the following are monitoring documents commonly provided by a
borrower on a monthly or quarterly basis? Select all correct answers. - ANSWER
✓ Compliance certificates, Unaudited financial statements, Tax returns
Financial statement review - ANSWER ✓ Involves re-assessing the cash flow and
financial position of the borrower.
Security review - ANSWER ✓ Involves re-assessing any assets that are being
used as protection in the case of default.
, Management review - ANSWER ✓ Involves re-assessing any changes that have
occurred within management that may impact the business' ability to tackle
potential issues.
Business review - ANSWER ✓ Involves re-assessing the direction of the business,
potential opportunities, and other issues the company is facing.
Which of the following is NOT a reason to perform an annual review on a
borrower? - ANSWER ✓ An annual review gives a borrower a sense of general
loan parameters such as the interest rate, time to maturity, and security.
Which of the following is a reason to perform an annual review on a borrower? -
ANSWER ✓ An annual review provides an opportunity to do a comprehensive re-
assessment.
An annual review allows a lender to re-assess and meet a borrower's changing
needs.
An annual review helps a lender identify a borrower's business trends, early
warning signs and mitigate credit risk.
Which of the following activities will be performed during a security review? -
ANSWER ✓ A re-assessment of personal and corporate guarantors.
Which of the following is the best reason to take on debt instead of equity? -
ANSWER ✓ Debt is non-dilutive.
Which of the following types of debt ranks the LOWEST on the capital stack? -
ANSWER ✓ Mezz unsecured
Which debt repayment profile pays only interest throughout the loan term, and
pays off the full principal at the end of the loan term? - ANSWER ✓ Bullet
repayment
Which of these business categories are not on the banking spectrum? - ANSWER
✓ Company banking
Which of these business categories are on the banking spectrum? - ANSWER ✓
Corporate Banking
Commercial Banking
WITH CORRECT SOLUTIONS||100%
GUARNTEED PASS||UPDATED
2026/2027 SYLLABUS||A+
GRADED||<<RECENT VERSION>>
Which of the following is NOT a benefit of including covenants in a loan
agreement? - ANSWER ✓ Covenants protect lenders by reducing their financial
loss in the event of default.
Which of the following is a benefit of including covenants in a loan agreement? -
ANSWER ✓ Covenants restrict borrowers from taking actions that can increase
the risk for the lenders; Covenants provide borrowers with clear expectations of the
lenders; Covenants reduce the cost of borrowing because lenders are more willing
to provide a lower interest rate when they can impose restrictions.
Select ALL the non-financial covenants from the list. - ANSWER ✓ The company
cannot change its business operations; The company must maintain minimum
insurance coverage of 2 million.
Select the correct formula to calculate the quick ratio. - ANSWER ✓ Quick Ratio
= (Cash & Equivalents + Marketable Securities + Accounts Receivable) / Current
Liabilities
Select the correct formula to calculate the working capital ratio. - ANSWER ✓
Working Capital Ratio = Current Assets / Current Liabilities
Which of the following scenarios is most likely to indicate high lending risk? -
ANSWER ✓ Low interest coverage ratio
What is the best next step when there is a breach of a loan covenant? - ANSWER
✓ Investigate why the breach happened
, Calculate debt service coverage ratio (using EBITDA instead of EBIT) based on
the company's financial information below:
Net Operating Profit: 12,000
Depreciation & Amortization: 2,000
Accounts Payable: 2,000
Line of Credit: 2,500
Current Portion of Long-Term Debt: 3,000
Interest Expense: 800 - ANSWER ✓ = 2.2 = 12,000+2,000/(2,500+3,000+800)
Calculate funded debt to EBITDA ratio based on the company's financial
information below:
Net Operating Profit: 12,000
Depreciation & Amortization: 2,000
Accounts payable: 2,000
Line of Credit: 2,500
Current Portion of Long-Term Debt: 3,000
Non-Current Portion of Long-Term Debt: 15,000 - ANSWER ✓ = 1.5 =
(15,000+3,000+2,500)/(12,000+2,000)
If a company takes out a 5-year equally amortizing loan of 20,000, and 6 months
later purchases equipment with that loan, what will happen to its financial
statements? - ANSWER ✓ Current portion of long-term debt will increase by
4,000.
Monitoring - ANSWER ✓ It involves determining new level of credit risk
associated with a borrower.
Documentation - ANSWER ✓ It provides timely, relevant and thorough
information for loan approval, security and monitoring.
Re-classifying - ANSWER ✓ It involves undertaking regular reviews of a
borrower's financial statements and evaluating changes in a borrower's business.
Which of the following statements is NOT true about credit administration? -
ANSWER ✓ Credit administration is about documentation, ongoing monitoring,
and possibly re-classifying a borrower before a loan has been made.
, Which of the following statements are true about credit administration? -
ANSWER ✓ Appropriate credit administration and documentation practices allow
for better information for more informed decision regarding actions taken towards
a borrower's account.
Proper credit documentation practices allow for more flexibility to respond to
changes in a borrower's circumstances.
Credit administration is important for identifying problems in a borrower's account
and reducing the risk of credit default.
Loan approval documentation - ANSWER ✓ Term sheet, loan agreement,
commitment letter
Monitoring documentation - ANSWER ✓ Annual review; monthly/quarterly
report
Which of the following is the correct order of documentation submission in the
loan approval process? - ANSWER ✓ Loan application -> Term sheet ->
Commitment letter -> Loan agreement
What is a term sheet? - ANSWER ✓ A non-binding agreement given to the
borrower that summarizes primary terms including the interest rate, time to
maturity, and security.
What are covenants? - ANSWER ✓ Clauses in a loan agreement outlining what a
borrower must maintain or what they are restricted from doing.
Which of the following are monitoring documents commonly provided by a
borrower on a monthly or quarterly basis? Select all correct answers. - ANSWER
✓ Compliance certificates, Unaudited financial statements, Tax returns
Financial statement review - ANSWER ✓ Involves re-assessing the cash flow and
financial position of the borrower.
Security review - ANSWER ✓ Involves re-assessing any assets that are being
used as protection in the case of default.
, Management review - ANSWER ✓ Involves re-assessing any changes that have
occurred within management that may impact the business' ability to tackle
potential issues.
Business review - ANSWER ✓ Involves re-assessing the direction of the business,
potential opportunities, and other issues the company is facing.
Which of the following is NOT a reason to perform an annual review on a
borrower? - ANSWER ✓ An annual review gives a borrower a sense of general
loan parameters such as the interest rate, time to maturity, and security.
Which of the following is a reason to perform an annual review on a borrower? -
ANSWER ✓ An annual review provides an opportunity to do a comprehensive re-
assessment.
An annual review allows a lender to re-assess and meet a borrower's changing
needs.
An annual review helps a lender identify a borrower's business trends, early
warning signs and mitigate credit risk.
Which of the following activities will be performed during a security review? -
ANSWER ✓ A re-assessment of personal and corporate guarantors.
Which of the following is the best reason to take on debt instead of equity? -
ANSWER ✓ Debt is non-dilutive.
Which of the following types of debt ranks the LOWEST on the capital stack? -
ANSWER ✓ Mezz unsecured
Which debt repayment profile pays only interest throughout the loan term, and
pays off the full principal at the end of the loan term? - ANSWER ✓ Bullet
repayment
Which of these business categories are not on the banking spectrum? - ANSWER
✓ Company banking
Which of these business categories are on the banking spectrum? - ANSWER ✓
Corporate Banking
Commercial Banking
