CFI CBCA Verified Multiple Choice and
Conceptual Actual Exam Questions With
Reviewed 100% Correct Detailed Answers
Guaranteed Pass!!Current Update
1. The most common warning signs are deteriorating financial and non-financial
indicators: - ANSWER financial indicators:
-Declining profitability (look for changes in operating profits and profit margins)
-Decreasing sales volume (look for sales volumes after adjusting for inflation)
-Increased leverage / gearing (look for increases in debt funding)
-Decreased liquidity (look at changes in the current ratio or the quick ratio)
-Reduced / increased dividends (look for changes in dividend or other
shareholding payments)
non-financial indicators:
-Delays in reporting (look for unusual delays in publishing financial statements)
-Poor management skills (does management deliver what it promises?)
-Management changes (look for unusual or rapid turnover of senior managers)
-Declining market share (look at changes in the market in which the company
operates)
-Poor planning procedures (including a lack of strategic thinking)
,2. Principle Causes of Decline - ANSWER Poor Management ; Inadequate
Financial Control
-Adverse Commodity Prices
-Competition
-Big Projects
-Overtrading
-Financial Policy
-Changes in Market Demand
-Acquisitions
-Marketing failure
3. Leading Causes of Decline
In a study by Stuart Slatter of 40 declining listed companies, two causes occurred
twice as frequently as all other causes of decline. - ANSWER Poor
management and Inadequate financial control
4. Leading Causes of Decline - Poor Management - ANSWER • Lack of
management depth and experience
• A dominant chief executive or a combined CEO & Chair
• An ineffective board of directors
• Management neglect of the core business
• Relationship deterioration with customer/supplier
, 5. Leading Causes of Decline - Poor Financial Control - ANSWER • Absence of
cash flow forecasts, costing systems and budgetary control
• Poorly designed or overly complex management accounting and reporting
systems
• Poorly used management reporting systems
• Over-centralized financial reporting systems leading to remoteness
• Reporting distortions arising from inappropriate cost and overhead allocations
6. Types of Financial/Internal Controls to Look For - ANSWER -Organizational
-Accounting Checks and Reconciliations
-Physical
-Segregation of Duties
-Personnel
-Authorization and Approval
-Supervision
-Control Culture
7. Establishing Early Warning Signals for Corporate Clients
Signals must: - ANSWER 01Be client-specific - choose an event based on the
client's business operations
02Be measurable - you can easily measure whether the event has occurred
03Be monitorable - you can easily monitor the chosen signals using the
information you receive 04Trigger action - first action should be to contact the
client
Conceptual Actual Exam Questions With
Reviewed 100% Correct Detailed Answers
Guaranteed Pass!!Current Update
1. The most common warning signs are deteriorating financial and non-financial
indicators: - ANSWER financial indicators:
-Declining profitability (look for changes in operating profits and profit margins)
-Decreasing sales volume (look for sales volumes after adjusting for inflation)
-Increased leverage / gearing (look for increases in debt funding)
-Decreased liquidity (look at changes in the current ratio or the quick ratio)
-Reduced / increased dividends (look for changes in dividend or other
shareholding payments)
non-financial indicators:
-Delays in reporting (look for unusual delays in publishing financial statements)
-Poor management skills (does management deliver what it promises?)
-Management changes (look for unusual or rapid turnover of senior managers)
-Declining market share (look at changes in the market in which the company
operates)
-Poor planning procedures (including a lack of strategic thinking)
,2. Principle Causes of Decline - ANSWER Poor Management ; Inadequate
Financial Control
-Adverse Commodity Prices
-Competition
-Big Projects
-Overtrading
-Financial Policy
-Changes in Market Demand
-Acquisitions
-Marketing failure
3. Leading Causes of Decline
In a study by Stuart Slatter of 40 declining listed companies, two causes occurred
twice as frequently as all other causes of decline. - ANSWER Poor
management and Inadequate financial control
4. Leading Causes of Decline - Poor Management - ANSWER • Lack of
management depth and experience
• A dominant chief executive or a combined CEO & Chair
• An ineffective board of directors
• Management neglect of the core business
• Relationship deterioration with customer/supplier
, 5. Leading Causes of Decline - Poor Financial Control - ANSWER • Absence of
cash flow forecasts, costing systems and budgetary control
• Poorly designed or overly complex management accounting and reporting
systems
• Poorly used management reporting systems
• Over-centralized financial reporting systems leading to remoteness
• Reporting distortions arising from inappropriate cost and overhead allocations
6. Types of Financial/Internal Controls to Look For - ANSWER -Organizational
-Accounting Checks and Reconciliations
-Physical
-Segregation of Duties
-Personnel
-Authorization and Approval
-Supervision
-Control Culture
7. Establishing Early Warning Signals for Corporate Clients
Signals must: - ANSWER 01Be client-specific - choose an event based on the
client's business operations
02Be measurable - you can easily measure whether the event has occurred
03Be monitorable - you can easily monitor the chosen signals using the
information you receive 04Trigger action - first action should be to contact the
client
