CPHR Financial Analysis and Reporting 4

Question 1

When HR prepares a headcount forecast, what does 'attrition rate' directly inform?

Accepted Answer

Projected number of positions that will need to be backfilled

Answer

Attrition rate predicts how many current employees will leave, directly driving backfill hiring demand in workforce planning.

Question 2

A company's income statement shows revenue of $5M, COGS of $3M, and operating expenses of $1.2M. What is the operating income?

Accepted Answer

$800,000

Answer

Operating income = Revenue − COGS − Operating Expenses = $5M − $3M − $1.2M = $800,000.

Question 3

Which financial analysis technique compares each line item on a financial statement as a percentage of a base figure, such as total revenue?

Accepted Answer

Vertical analysis

Answer

Vertical analysis expresses each line item as a percentage of a base figure (e.g., revenue on income statement, total assets on balance sheet).

Question 4

HR is evaluating two compensation structures. Plan A has a higher fixed salary cost, while Plan B uses more variable incentive pay. In a revenue downturn, which plan better protects the organization?

Accepted Answer

Plan B, because variable costs decrease naturally with lower performance

Answer

Variable pay plans reduce compensation expenses automatically when performance metrics decline, providing cost flexibility during revenue downturns.

Question 5

What is 'break-even analysis' used to determine in HR financial planning?

Accepted Answer

The point at which an HR program's benefits equal its costs

Answer

Break-even analysis identifies the point where the benefits of an HR investment exactly equal its total costs, after which net value is positive.

(CPHR) Chartered Professional in Human Resources Practice Test

(CPHR) Chartered Professional in Human Resources Practice Test

CPHR Financial Analysis and Reporting 4