CFI CBCA CORE PRACTICE SET 2026
CORE CONCEPTS QUESTIONS ANSWERS
HIGH YIELD A+
◉ The cash conversion cycle measures:
Answer: The number of days it takes for a company to turn its
resource inputs into cash
◉ Calculate the ROI based on the cash flows of each year:
2020 Cash Flows -$2,000
2021 Cash Flows $100
2022 Cash Flows $300
2023 Cash Flows $500
2024 Cash Flows $700
2025 Cash Flows $900
Answer: ROI = 25% = 2025 Cum. Cash Flows / Minimum Cum. Cash
Flows
◉ Calculate the net cash provided by the operating activities based
on the information below:
Net income: 60,000
,Depreciation: 25,000
Increase in accounts receivable: 12,000
Increase in inventory: 8,000
Increase in accounts payable: 15,000
Answer: 80,000 = Net Income + Depreciation - Increase in accounts
receivable - Increase in inventory + Increase in accounts payable
◉ Calculate the total capital expenditure of 2018 based on the
information below:
2017 PP&E: 43,000
2018 PP&E: 65,000
2017 Depreciation: 10,000
2018 Depreciation: 12,000
Answer: = 34,000 = 2018 PP&E - 2017 PP&E + 2018 Depreciation
◉ Calculate the company's free cash flow for the current year based
on the information below:
Net income: 60,000
Depreciation: 25,000
Increase in accounts receivable: 12,000
Increase in inventory: 8,000
Increase in accounts payable: 15,000
,Capital expenditures: 45,000
Increase in long-term debt: 15,000
Answer: Cash from Operations = Net income + Depreciation -
Increase in accounts receivable - Increase in inventory + Increase in
accounts payable = 80,000
Free cash flow = Cash from Operations - Capital Expenditures
Free cash flow = 35,000
◉ What is the starting point when conducting a financial analysis of
the performance of a company?
Answer: Review of company financial statements
◉ With an end goal in mind, what is the purpose for a credit analyst
or commercial banking professional completing a financial analysis?
Answer: To understand a company's overall financial health and
credit risk.
◉ Which of the following is not a part of completing a vertical
analysis?
Answer: Comparison of line items between the balance sheet and
income statement
, ◉ Which of the following is a part of completing a vertical analysis?
Answer: Comparing line items in a single financial statement to a
base figure; Comparison of the client's profile to another company in
the same credit portfolio; Comparison of the client's profile to their
peer group using third party benchmarks
◉ Financial ratios include:
Answer: Coverage, leverage, and liquidity
◉ The gross profit margin is calculated as...
Answer: (Revenue - COGS) /Revenue
◉ Which of the following are unique features of a balance sheet?
Select ALL that apply.
Answer: The asset section is broken down into two sections: current
and non-current assets; Assets are typically organized in terms of
liquidity.
◉ Efficiency ratios are important to look at how efficiently a
company is using its assets. An example of this would be the Asset
Turnover Ratio, which is calculated as...
Answer: Net sales /Total (or net) Assets
CORE CONCEPTS QUESTIONS ANSWERS
HIGH YIELD A+
◉ The cash conversion cycle measures:
Answer: The number of days it takes for a company to turn its
resource inputs into cash
◉ Calculate the ROI based on the cash flows of each year:
2020 Cash Flows -$2,000
2021 Cash Flows $100
2022 Cash Flows $300
2023 Cash Flows $500
2024 Cash Flows $700
2025 Cash Flows $900
Answer: ROI = 25% = 2025 Cum. Cash Flows / Minimum Cum. Cash
Flows
◉ Calculate the net cash provided by the operating activities based
on the information below:
Net income: 60,000
,Depreciation: 25,000
Increase in accounts receivable: 12,000
Increase in inventory: 8,000
Increase in accounts payable: 15,000
Answer: 80,000 = Net Income + Depreciation - Increase in accounts
receivable - Increase in inventory + Increase in accounts payable
◉ Calculate the total capital expenditure of 2018 based on the
information below:
2017 PP&E: 43,000
2018 PP&E: 65,000
2017 Depreciation: 10,000
2018 Depreciation: 12,000
Answer: = 34,000 = 2018 PP&E - 2017 PP&E + 2018 Depreciation
◉ Calculate the company's free cash flow for the current year based
on the information below:
Net income: 60,000
Depreciation: 25,000
Increase in accounts receivable: 12,000
Increase in inventory: 8,000
Increase in accounts payable: 15,000
,Capital expenditures: 45,000
Increase in long-term debt: 15,000
Answer: Cash from Operations = Net income + Depreciation -
Increase in accounts receivable - Increase in inventory + Increase in
accounts payable = 80,000
Free cash flow = Cash from Operations - Capital Expenditures
Free cash flow = 35,000
◉ What is the starting point when conducting a financial analysis of
the performance of a company?
Answer: Review of company financial statements
◉ With an end goal in mind, what is the purpose for a credit analyst
or commercial banking professional completing a financial analysis?
Answer: To understand a company's overall financial health and
credit risk.
◉ Which of the following is not a part of completing a vertical
analysis?
Answer: Comparison of line items between the balance sheet and
income statement
, ◉ Which of the following is a part of completing a vertical analysis?
Answer: Comparing line items in a single financial statement to a
base figure; Comparison of the client's profile to another company in
the same credit portfolio; Comparison of the client's profile to their
peer group using third party benchmarks
◉ Financial ratios include:
Answer: Coverage, leverage, and liquidity
◉ The gross profit margin is calculated as...
Answer: (Revenue - COGS) /Revenue
◉ Which of the following are unique features of a balance sheet?
Select ALL that apply.
Answer: The asset section is broken down into two sections: current
and non-current assets; Assets are typically organized in terms of
liquidity.
◉ Efficiency ratios are important to look at how efficiently a
company is using its assets. An example of this would be the Asset
Turnover Ratio, which is calculated as...
Answer: Net sales /Total (or net) Assets
