CBP Financial Analysis & Credit Management

Question 1

What is the purpose of financial ratio analysis in credit assessment?

Accepted Answer

To assess creditworthiness

Answer

To forecast market trends

Answer

To manage interest rates

Answer

To evaluate staff performance

Question 2

Which of the following is a key component of a credit report?

Accepted Answer

Credit history and repayment record

Answer

Investment portfolio

Answer

Loan amount only

Answer

Real estate holdings

Question 3

What does the debt-to-equity ratio measure?

Accepted Answer

Financial leverage

Answer

Cash reserves

Answer

Net income growth

Answer

Inventory turnover

Question 4

What is the role of collateral in credit management?

Accepted Answer

To secure the loan against default

Answer

To increase interest income

Answer

To eliminate credit checks

Answer

To reduce paperwork

Question 5

Which financial statement shows a company’s financial position at a specific point in time?

Accepted Answer

Balance sheet

Answer

Income statement

Answer

Cash flow statement

Answer

Profit and loss summary

Question 6

Why is credit scoring important in financial institutions?

Accepted Answer

To assess borrower risk efficiently

Answer

To calculate tax returns

Answer

To track inflation

Answer

To monitor staff productivity