CFI CBCA Questions and Answers
(2026/2027) | Updated Review | A+
Verified
• Which of the following statements describes a "Capacity" strength or weakness
for a company in the 5 Cs of credit framework? -✓✓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? -✓✓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? -
✓✓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? -✓✓High asset turnover ratio
• Select the correct formula to calculate the operating margin ratio. -✓✓Operating
Margin Ratio = EBIT / Revenue
• Select the correct formula to calculate the inventory turnover ratio. -
✓✓Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
• Which of the following most likely indicates strong "Capital" for a company? -
✓✓Unutilized lines of credit or loans
,• Which of the following statements on collateral is NOT correct? -✓✓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? -✓✓PEST analysis
• Select the loan contract with the lowest risk. -✓✓A demand loan with monthly
payments secured by assets
• Which is not one of the three main financial statements? -✓✓Statement of equity
• What does the balance sheet indicate? -✓✓The financial strength of the business
• Financing activities -✓✓Issuing shares and bonds
• Operating activities -✓✓Payments to suppliers; Depreciation and amortization
expense
• Investing activities -✓✓Buying and selling equipment
• Which is not a section in the financial statement note disclosures? -
✓✓Management discussion and analysis
• Balance Sheet -✓✓Retained earnings; Share captial
,• Income Statement -✓✓Rent expense
• Cash Flow Statement -✓✓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? -✓✓$2.1
million
• Intangible assets -✓✓Items of value, which have no physical substance, that are
used to generate revenues
• Authorized shares -✓✓The total number of shares a company can sell
• Contingencies -✓✓Events that may or may not happen, depending on certain
circumstances
• Commitments -✓✓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? -✓✓$3,000
• What line item is not found in the statement of shareholders' equity? -✓✓Debt
issued or repurchased
• What is not true about a partnership? -✓✓Partners cannot be held liable for a
debt
, • Which line item usually accounts for direct labor? -✓✓Cost of goods sold
• Select the statements below which are true. Select all that apply. -
✓✓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? -✓✓Adverse, unqualified, qualified, and
disclaimer of opinion
• Which of the following statements regarding a review engagement is false? -
✓✓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). -✓✓Debt to equity ratio; Working capital ratio
• Which of the following tools is NOT used to analyze a company? -✓✓Porter's
five forces
• Which of the following tools are used to analyze a company? -✓✓Firm lifecycle,
Ansoff's matrix, SWOT analysis
• In assessing the PESTEL factors, consumer disposable income is an example of:
-✓✓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
(2026/2027) | Updated Review | A+
Verified
• Which of the following statements describes a "Capacity" strength or weakness
for a company in the 5 Cs of credit framework? -✓✓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? -✓✓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? -
✓✓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? -✓✓High asset turnover ratio
• Select the correct formula to calculate the operating margin ratio. -✓✓Operating
Margin Ratio = EBIT / Revenue
• Select the correct formula to calculate the inventory turnover ratio. -
✓✓Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
• Which of the following most likely indicates strong "Capital" for a company? -
✓✓Unutilized lines of credit or loans
,• Which of the following statements on collateral is NOT correct? -✓✓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? -✓✓PEST analysis
• Select the loan contract with the lowest risk. -✓✓A demand loan with monthly
payments secured by assets
• Which is not one of the three main financial statements? -✓✓Statement of equity
• What does the balance sheet indicate? -✓✓The financial strength of the business
• Financing activities -✓✓Issuing shares and bonds
• Operating activities -✓✓Payments to suppliers; Depreciation and amortization
expense
• Investing activities -✓✓Buying and selling equipment
• Which is not a section in the financial statement note disclosures? -
✓✓Management discussion and analysis
• Balance Sheet -✓✓Retained earnings; Share captial
,• Income Statement -✓✓Rent expense
• Cash Flow Statement -✓✓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? -✓✓$2.1
million
• Intangible assets -✓✓Items of value, which have no physical substance, that are
used to generate revenues
• Authorized shares -✓✓The total number of shares a company can sell
• Contingencies -✓✓Events that may or may not happen, depending on certain
circumstances
• Commitments -✓✓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? -✓✓$3,000
• What line item is not found in the statement of shareholders' equity? -✓✓Debt
issued or repurchased
• What is not true about a partnership? -✓✓Partners cannot be held liable for a
debt
, • Which line item usually accounts for direct labor? -✓✓Cost of goods sold
• Select the statements below which are true. Select all that apply. -
✓✓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? -✓✓Adverse, unqualified, qualified, and
disclaimer of opinion
• Which of the following statements regarding a review engagement is false? -
✓✓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). -✓✓Debt to equity ratio; Working capital ratio
• Which of the following tools is NOT used to analyze a company? -✓✓Porter's
five forces
• Which of the following tools are used to analyze a company? -✓✓Firm lifecycle,
Ansoff's matrix, SWOT analysis
• In assessing the PESTEL factors, consumer disposable income is an example of:
-✓✓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
