CFP CFP Business & Financial Management 1

Question 1

A personal trainer setting up an independent fitness business should primarily use which business structure to limit personal liability?

Accepted Answer

Limited Liability Company (LLC)

Answer

An LLC separates personal assets from business liabilities, protecting the trainer from lawsuits arising from client injuries.

Question 2

Which financial document gives a certified fitness professional the best snapshot of monthly profitability?

Accepted Answer

Income statement (Profit & Loss)

Answer

The income statement (P&L) shows revenues minus expenses over a period, directly revealing whether the business is profitable.

Question 3

A CFP wants to price sessions to cover costs and achieve a 30% profit margin. If total monthly costs are $3,000 and they plan 100 sessions per month, what is the minimum price per session?

Accepted Answer

$43

Answer

Cost per session is $30; adding a 30% margin means dividing $30 by 0.70, yielding approximately $42.86 (~$43).

Question 4

Which type of insurance is MOST important for a self-employed certified fitness professional to carry?

Accepted Answer

Professional liability (E&O) insurance

Answer

Professional liability insurance protects the trainer against claims of negligence or injury resulting from their professional services.

Question 5

A fitness professional tracks that 20% of clients leave within the first 3 months. Which metric best describes this problem?

Accepted Answer

Client retention rate / churn rate

Answer

Churn rate (inverse of retention rate) measures the percentage of clients who discontinue services within a given period.

(CFP) Certified Fitness Professional Practice Test

(CFP) Certified Fitness Professional Practice Test

CFP CFP Business & Financial Management 1