CFI CBCA Core Course Assessments & Quizzes
With All Correct Answers
What is the main goal of using business writing fundamentals? Correct 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? Correct 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? Correct 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? Correct 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? Correct
answer-High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. Correct answer-Operating
Margin Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. Correct answer-Inventory
Turnover Ratio = Cost of Goods Sold / Average Inventory
Which of the following most likely indicates strong "Capital" for a company? Correct answer-
Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? 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?
Correct answer-PEST analysis
Select the loan contract with the lowest risk. Correct answer-A demand loan with monthly
payments secured by assets
Which is not one of the three main financial statements? Correct answer-Statement of equity
What does the balance sheet indicate? Correct answer-The financial strength of the business
Financing activities Correct answer-Issuing shares and bonds
Operating activities Correct answer-Payments to suppliers; Depreciation and amortization expense
Investing activities Correct answer-Buying and selling equipment
Which is not a section in the financial statement note disclosures? Correct answer-Management
discussion and analysis
,Balance Sheet Correct answer-Retained earnings; Share captial
Income Statement Correct answer-Rent expense
Cash Flow Statement Correct 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? Correct answer-$2.1 million
Intangible assets Correct answer-Items of value, which have no physical substance, that are used to
generate revenues
Authorized shares Correct answer-The total number of shares a company can sell
Contingencies Correct answer-Events that may or may not happen, depending on certain
circumstances
Commitments Correct 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? Correct answer-$3,000
What line item is not found in the statement of shareholders' equity? Correct answer-Debt issued
or repurchased
What is not true about a partnership? Correct answer-Partners cannot be held liable for a debt
Which line item usually accounts for direct labor? Correct answer-Cost of goods sold
Select the statements below which are true. Select all that apply. Correct 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? Correct answer-Adverse, unqualified, qualified, and
disclaimer of opinion
Which of the following statements regarding a review engagement is false? Correct 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). Correct answer-Debt to equity ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? Correct answer-Porter's five forces
Which of the following tools are used to analyze a company? Correct answer-Firm lifecycle,
Ansoff's matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of: Correct answer-
Economic 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. Correct answer-Social 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: https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-regulations)
Correct answer-Legal factors
When competition within an industry is high, which of the following is most likely to be true?
Correct answer-Buyers have high bargaining power
Which of the following is most likely true for companies at the maturity stage of the industry
lifecycle? Correct answer-Sales > Cash Flow > Profit
According to the growth/share matrix, companies at maturity have: Correct answer-Low 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? Correct answer-Growth
Read the following passage and determine which of the following strategies the business uses in
creating solid relationship with its customers.
Innovation Co. is an international smartphone manufacturer which currently holds more than 15% of
global smartphone market share. One of the superior product features it offers (seamless integration
with any smart devices including televisions, smart home electronics, and home assistance) is the
selling point of the company's latest smartphone series, creating a huge competitive advantage over
its competitors. This premium feature also allows Innovation Co. to charge an above-average price
while maintaining a loyal customer base. Correct answer-Best product
Which of the following strategies describes a company's attempt to enter into new markets with its
existing products? Correct answer-Market development
Which of the following strategies describes a company's attempt to enter into new markets with new
products? Correct answer-Diversification
According to the course, which is the most important section of the business plan? Correct answer-
Executive Summary
With All Correct Answers
What is the main goal of using business writing fundamentals? Correct 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? Correct 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? Correct 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? Correct 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? Correct
answer-High asset turnover ratio
Select the correct formula to calculate the operating margin ratio. Correct answer-Operating
Margin Ratio = EBIT / Revenue
Select the correct formula to calculate the inventory turnover ratio. Correct answer-Inventory
Turnover Ratio = Cost of Goods Sold / Average Inventory
Which of the following most likely indicates strong "Capital" for a company? Correct answer-
Unutilized lines of credit or loans
Which of the following statements on collateral is NOT correct? 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?
Correct answer-PEST analysis
Select the loan contract with the lowest risk. Correct answer-A demand loan with monthly
payments secured by assets
Which is not one of the three main financial statements? Correct answer-Statement of equity
What does the balance sheet indicate? Correct answer-The financial strength of the business
Financing activities Correct answer-Issuing shares and bonds
Operating activities Correct answer-Payments to suppliers; Depreciation and amortization expense
Investing activities Correct answer-Buying and selling equipment
Which is not a section in the financial statement note disclosures? Correct answer-Management
discussion and analysis
,Balance Sheet Correct answer-Retained earnings; Share captial
Income Statement Correct answer-Rent expense
Cash Flow Statement Correct 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? Correct answer-$2.1 million
Intangible assets Correct answer-Items of value, which have no physical substance, that are used to
generate revenues
Authorized shares Correct answer-The total number of shares a company can sell
Contingencies Correct answer-Events that may or may not happen, depending on certain
circumstances
Commitments Correct 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? Correct answer-$3,000
What line item is not found in the statement of shareholders' equity? Correct answer-Debt issued
or repurchased
What is not true about a partnership? Correct answer-Partners cannot be held liable for a debt
Which line item usually accounts for direct labor? Correct answer-Cost of goods sold
Select the statements below which are true. Select all that apply. Correct 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? Correct answer-Adverse, unqualified, qualified, and
disclaimer of opinion
Which of the following statements regarding a review engagement is false? Correct 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). Correct answer-Debt to equity ratio; Working capital ratio
Which of the following tools is NOT used to analyze a company? Correct answer-Porter's five forces
Which of the following tools are used to analyze a company? Correct answer-Firm lifecycle,
Ansoff's matrix, SWOT analysis
In assessing the PESTEL factors, consumer disposable income is an example of: Correct answer-
Economic 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. Correct answer-Social 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: https://www.fmcsa.dot.gov/regulations/hours-service/summary-hours-service-regulations)
Correct answer-Legal factors
When competition within an industry is high, which of the following is most likely to be true?
Correct answer-Buyers have high bargaining power
Which of the following is most likely true for companies at the maturity stage of the industry
lifecycle? Correct answer-Sales > Cash Flow > Profit
According to the growth/share matrix, companies at maturity have: Correct answer-Low 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? Correct answer-Growth
Read the following passage and determine which of the following strategies the business uses in
creating solid relationship with its customers.
Innovation Co. is an international smartphone manufacturer which currently holds more than 15% of
global smartphone market share. One of the superior product features it offers (seamless integration
with any smart devices including televisions, smart home electronics, and home assistance) is the
selling point of the company's latest smartphone series, creating a huge competitive advantage over
its competitors. This premium feature also allows Innovation Co. to charge an above-average price
while maintaining a loyal customer base. Correct answer-Best product
Which of the following strategies describes a company's attempt to enter into new markets with its
existing products? Correct answer-Market development
Which of the following strategies describes a company's attempt to enter into new markets with new
products? Correct answer-Diversification
According to the course, which is the most important section of the business plan? Correct answer-
Executive Summary
