CUNA MGMT School Final Study Guide
Test.
What is Economics? - CORRECT ANSWER The study of the confusion between stocks (balance sheets)and
flows (income statement)
What are the building blocks on the balance sheet? - CORRECT ANSWER Assets, Liabilities and Capital
What is spread analysis? (aka net interest margin analysis) - CORRECT ANSWER Measures profitability
and how it was attained
What ratio identifies how many cents it costs to earn 1 dollar in revenue? - CORRECT ANSWER efficiency
ratio
What ratio measures how efficiently deposits are turned into loans? - CORRECT ANSWER Loan to Share
Ratio
Most common measure of profitability for a CU - CORRECT ANSWER Return on Assets
What is definition of return on assets - CORRECT ANSWER Short term profitability (how well your assets
are working for you)
Which building blocks of accounting are reported on the income statement - CORRECT ANSWER
Revenue and Expenses
What ratios are considered "universal ratios" - CORRECT ANSWER capital to assets(net worth), loan to
share, spread analysis with ROA, delinquency and charge offs
What is the purpose of Capital - CORRECT ANSWER Insure safety and soundness, sustained growth, rainy
day fund and the ability to take calculated risks
, what are the most important sources of revenue - CORRECT ANSWER interest income/non interest
income
what is the most common measure of profitability in credit unions - CORRECT ANSWER ROA (return on
assets)
What ratio measures how efficiently deposits are turned into loans - CORRECT ANSWER net interest
margin
Which ratio identifies how many cents it costs to earn $1 in revenue - CORRECT ANSWER Efficiency ratio
Definition of spread analysis - CORRECT ANSWER measure of profitability and how it was attained
Definition of ROA (return on assets) - CORRECT ANSWER Short term profitability
Definition of Capital to assets ratio - CORRECT ANSWER long term stability
What are the 5 universal ratios - CORRECT ANSWER Net Wort (capital), loan to share, spread analysis
with ROA, Delinquency and Net charge off
What does Capital Risk measure - CORRECT ANSWER the risk of insolvency (assets less liabilities) and
failure
What will increase asset utilization - CORRECT ANSWER Increase credit risk
What must grow at the same speed - CORRECT ANSWER Assets and Capital
Definition of ROE (return on equity) - CORRECT ANSWER Sustainable asset growth rate
Definition of liquidity Risk - CORRECT ANSWER Maintaining an adequate availability of funds (for loan
demand, deposit flows and expense payments in a changing interest rate environment
Test.
What is Economics? - CORRECT ANSWER The study of the confusion between stocks (balance sheets)and
flows (income statement)
What are the building blocks on the balance sheet? - CORRECT ANSWER Assets, Liabilities and Capital
What is spread analysis? (aka net interest margin analysis) - CORRECT ANSWER Measures profitability
and how it was attained
What ratio identifies how many cents it costs to earn 1 dollar in revenue? - CORRECT ANSWER efficiency
ratio
What ratio measures how efficiently deposits are turned into loans? - CORRECT ANSWER Loan to Share
Ratio
Most common measure of profitability for a CU - CORRECT ANSWER Return on Assets
What is definition of return on assets - CORRECT ANSWER Short term profitability (how well your assets
are working for you)
Which building blocks of accounting are reported on the income statement - CORRECT ANSWER
Revenue and Expenses
What ratios are considered "universal ratios" - CORRECT ANSWER capital to assets(net worth), loan to
share, spread analysis with ROA, delinquency and charge offs
What is the purpose of Capital - CORRECT ANSWER Insure safety and soundness, sustained growth, rainy
day fund and the ability to take calculated risks
, what are the most important sources of revenue - CORRECT ANSWER interest income/non interest
income
what is the most common measure of profitability in credit unions - CORRECT ANSWER ROA (return on
assets)
What ratio measures how efficiently deposits are turned into loans - CORRECT ANSWER net interest
margin
Which ratio identifies how many cents it costs to earn $1 in revenue - CORRECT ANSWER Efficiency ratio
Definition of spread analysis - CORRECT ANSWER measure of profitability and how it was attained
Definition of ROA (return on assets) - CORRECT ANSWER Short term profitability
Definition of Capital to assets ratio - CORRECT ANSWER long term stability
What are the 5 universal ratios - CORRECT ANSWER Net Wort (capital), loan to share, spread analysis
with ROA, Delinquency and Net charge off
What does Capital Risk measure - CORRECT ANSWER the risk of insolvency (assets less liabilities) and
failure
What will increase asset utilization - CORRECT ANSWER Increase credit risk
What must grow at the same speed - CORRECT ANSWER Assets and Capital
Definition of ROE (return on equity) - CORRECT ANSWER Sustainable asset growth rate
Definition of liquidity Risk - CORRECT ANSWER Maintaining an adequate availability of funds (for loan
demand, deposit flows and expense payments in a changing interest rate environment
