CFI CBCA Core Course Exam Questions And Answers (Verified And Updated)

CFI CBCA Core Course Exam Questions And Answers (Verified And Updated) What is the main goal of using business writing fundamentals? - answerTo reduce mental effort Which of the following statements describes a "Capacity" strength or weakness for a company in the 5 Cs of credit framework? - answerThe 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? - answerThe 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? - answerFinancial 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? - answerHigh asset turnover ratio Select the correct formula to calculate the operating margin ratio. - answerOperating Margin Ratio = EBIT / Revenue Select the correct formula to calculate the inventory turnover ratio. - answerInventory Turnover Ratio = Cost of Goods Sold / Average Inventory Which of the following most likely indicates strong "Capital" for a company? - answerUnutilized lines of credit or loans Which of the following statements on collateral is NOT correct? - answerCollateral 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? - answerPEST analysis Select the loan contract with the lowest risk. - answerA demand loan with monthly payments secured by assets Which is not one of the three main financial statements? - answerStatement of equity What does the balance sheet indicate? - answerThe financial strength of the business Financing activities - answerIssuing shares and bonds Operating activities - answerPayments to suppliers; Depreciation and amortization expense Investing activities - answerBuying and selling equipment Which is not a section in the financial statement note disclosures? - answerManagement discussion and analysis Balance Sheet - answerRetained earnings; Share captial Income Statement - answerRent expense Cash Flow Statement - answerSale 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 - answerItems of value, which have no physical substance, that are used to generate revenues Authorized shares - answerThe total number of shares a company can sell Contingencies - answerEvents that may or may not happen, depending on certain circumstances Commitments - answerFuture 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? - answerDebt issued or repurchased What is not true about a partnership? - answerPartners cannot be held liable for a debt Which line item usually accounts for direct labor? - answerCost of goods sold Select the statements below which are true. Select all that apply. - answerDepreciation and amortization are non-cash expenses; A company can be profitable but experience negative cash flows What are the 4 types of audit opinions? - answerAdverse, unqualified, qualified, and disclaimer of opinion Which of the following statements regarding a review engagement is false? - answerA 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). - answerDebt to equity ratio; Working capital ratio Which of the following tools is NOT used to analyze a company? - answerPorter's five forces Which of the following tools are used to analyze a company? - answerFirm lifecycle, Ansoff's matrix, SWOT analysis In assessing the PESTEL factors, consumer disposable income is an example of: - answerEconomic factors Read the following passage and determine which of the PESTEL factors the described business is facing: Fresh and Co. is a local grocery store operating in a small town in Seattle since 2010. The store sells fresh vegetables, fruits, meat, dairy, and other packaged products. In recent years, people in the neighborhood have shown increasing demand for organic farm products. In response, many other grocery stores and supermarkets have started selling organic vegetables and fruits grown by local US farmers. - answerSocial factors Read the following passage and determine which of the PESTEL factors the described business is facing: Mountain Transportation is a trucking company that provides in-door deliveries of electronic products purchased through large consumer electronics retailers in the US. Shawn, a truck driver at Mountain Transportation, has filed a lawsuit with the company regarding a violation of the Hours of Service regulations for commercial drivers. Shawn claims that he has been forced to work over 70 hours for the past couple weeks, due to a high volume of customer orders. According to the Hours of Service regulations, all commercial drivers may not drive after 60 hours on duty in 7 consecutive days and may only restart after taking 34 or more consecutive hours off duty. (Source: regulations) - answerLegal factors When competition within an industry is high, which of the following is most likely to be true? - answerBuyers have high bargaining power Which of the following is most likely true for companies at the maturity stage of the industry lifecycle? - answerSales > Cash Flow > Profit According to the growth/share matrix, companies at maturity have: - answerLow market growth and high market share At which stage of the firm lifecycle would a company most likely have high business risk, low financial risk, and generate neutral net cash flow? - answerGrowth Read the following passage and determine which of the following strategies the business uses in creating solid relationship with its customers.