CBS Financial & Risk Management 5

Question 1

A company's EBITDA margin has improved while its net profit margin has declined. This most likely suggests:

Accepted Answer

Improved operational efficiency but higher interest, tax, or depreciation expenses

Answer

EBITDA excludes interest, taxes, depreciation, and amortization — an improving EBITDA margin with declining net margin points to rising costs in those excluded categories.

Question 2

In risk management, the term 'residual risk' refers to:

Accepted Answer

The risk remaining after mitigation controls have been implemented

Answer

Residual risk is the level of risk that persists after all planned risk treatment and control measures have been applied.

Question 3

Which of the following best describes systematic risk?

Accepted Answer

Market-wide risk that affects all investments and cannot be diversified away

Answer

Systematic risk, or market risk, is driven by macroeconomic factors affecting all assets and cannot be eliminated through diversification.

Question 4

A business uses a rolling 12-month cash flow forecast. What is the primary strategic advantage of this approach?

Accepted Answer

It provides continuously updated liquidity visibility enabling proactive financial decisions

Answer

Rolling forecasts continuously extend the planning horizon, giving management up-to-date cash flow visibility to anticipate and respond to liquidity needs.

Question 5

The Altman Z-Score is a financial model primarily used to predict:

Accepted Answer

Probability of corporate bankruptcy

Answer

The Altman Z-Score combines five financial ratios to produce a score that predicts the likelihood a company will enter bankruptcy within two years.

(CBS) Certified Business Strategist Practice Test

(CBS) Certified Business Strategist Practice Test

CBS Financial & Risk Management 5