CLFP Terms 4 Questions and Answers Latest Update | Graded A+.

CLFP Terms 4 Questions and Answers Latest Update | Graded A+. What information is reported on the income statement? correct answerIts a presentation of revenues and expenses for a specific time period (month, quarter, year). What information is reported on the statement of cash flows? correct answerIt shows cash receipts and payments during a specific period and includes non-cash expenses like depreciation and amortization. Equation for cash flow correct answer[net income + non-cash expense (depreciation/amortization) + non-cash income] - net working capital (current assets - current liabilities) How many years should be evaluated in trend analysis? correct answer3 or more What ratios represent a positive trend when increasing? correct answerCurrent ratio, quick ratio, sales, gross margin, and net profit margin. What ratios represent a positive trend when decreasing? correct answerDays receivable, days payable, and total liabilities/tangible net worth. What are ways lessors can mitigate credit risk? correct answer(a) portfolio management/policy (b) lease structure - shorter term, advance payment, guarantors, deposits, yield, additional collateral, vendor guarantess, reserve program (c) employee education List some of the steps involved in spreading financial statements correct answer(a) assets and liabilities are summarized and calculated as a % of assets or liabilities (common sized) (b) projected balance sheet showing the effect of the asset being acquired and the lease/loan obligation (c) common sizing the income statement (d) annualizing interim statements (e) calculating cash flow (f) calculating key ratios. Notice requirements for default correct answerWhile contracts allow for default to be declared without notice, in practice, it's wise to notify the lessee of default and to provide opportunity to cure prior to pursuing remedies. CLFP Terms 4 Questions and Answers Latest Update | Graded A+ "Commercially reasonable" sale of repossessed equipment correct answerIn a default, if equipment is repossessed, lessor must make all aspects of the resale or release commercially reasonable. Deeds of Trust correct answerused to take a lien on real property as additional security/collateral. List some of the responsibilities of the collection department correct answer(a) collects: lease payments, residuals, taxes, insurance premiums, late charges, all other amounts due (b) recognize signals (if past 30 days) (c) maintain customer goodwill (d) track portfolio performance (e) keep losses at a minimum What are signs of potential collection issues correct answer(a) slowness of payments (b) sudden changes in payment habits (c) NSF checks (d) insurance cancellation (e) change in ownership/management (f) broken promises (g) no return calls List essentials for effective collection efforts correct answer(a) equipment and industry knowledge (b) document collection activities (c) recognize red flags (d) accurate underwriting to ensure enforcement of collections "Self-help" repossession of leased assets can result in liability to the lessor if it: correct answer(a) occurs over the protest of the lessee (b) causes a disturbance of peace (c) causes physical/property damage (d) occurs without expressed consent (e) occurs unsupervised on lessee's property What are forms of repossession? correct answer(a) voluntary (b) involuntary (c) by writ of possession List alternative ways of working with delinquent lessees correct answer(a) collect partial payments (b) offer extensions (c) changes in due dates (d) recovery agreements with vendor (e) forbearance (aka breathing room) What is Date of Filing of Petition correct answerThe date the bankruptcy is filed and "automatic stay" goes into effect. This prevents further collections. In order to have stay lifted, a motion of relief of stay must be filed and approved by the court Bar Date correct answerThe last date on which an action by the creditor (filing proof of claim) may occur. You have repossessed equipment from a delinquent lessee. List the steps that must be taken to sell the equipment: correct answer(a) lessor must provide written notice to lessee, guarantors, and Jr. secured creditors (b) sale may be by public auction with notice providing date, time, and location (c) notice must be published in county newspaper where sale is held 5 days prior (d) sale could be private, but must be commercially reasonable Explain the advantages of having an arbitration clause in your lease document correct answerThe clause requires the parties to resolve their disputes through arbitration. It binds the parties to seek resolution outside the courts, reducing legal costs and saving time. What must a creditor do if they wish to receive funds from the bankrupt estate correct answerFile a proof of claim, by the bar date, stating the amount and nature of the debt. What tactics can be deployed to locate a lessee correct answer(a) skip trace (b) address search (c) do a SSN search (d) use social media What are some sources of funding for lease transactions? correct answer(a) banks (b) financial institutions (c) loans from private parties (d) private and public investors Funding Sources correct answer(a) internal funding (b) brokering (c) discounting [recourse or nonrecourse] (d) equity and debt [subordinate debt, revolving lines of credit "aka warehouse lines"] (e) asset securitization