Free CFSP Financial Planning & Analysis Questions and Answers

Question 1

What is the primary purpose of a cash flow statement in financial planning?

Accepted Answer

To track the inflows and outflows of cash

Answer

To calculate tax liabilities

Answer

To determine investment returns

Answer

To assess company market share

Question 2

Which ratio is most useful for evaluating a company's short-term liquidity?

Accepted Answer

Current ratio

Answer

Debt-to-equity ratio

Answer

Return on equity

Answer

Gross profit margin

Question 3

What is the key difference between fixed and variable costs in budgeting?

Accepted Answer

Fixed costs remain constant, variable costs change with production

Answer

Fixed costs change monthly, variable costs are stable

Answer

Variable costs are always higher than fixed costs

Answer

Only fixed costs are tax-deductible

Question 4

Which financial planning concept involves 'paying yourself first'?

Accepted Answer

Automated savings from income

Answer

Emergency fund allocation

Answer

Debt snowball method

Answer

Tax-loss harvesting

Question 5

What does NPV (Net Present Value) measure in capital budgeting?

Accepted Answer

Profitability of potential investments

Answer

Annual revenue growth

Answer

Employee productivity ratios

Answer

Market competition levels

Question 6

Which financial statement shows a company's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

Income statement

Answer

Cash flow statement

Answer

Statement of retained earnings

Question 7

What is the purpose of sensitivity analysis in financial planning?

Accepted Answer

To assess impact of variable changes on financial models

Answer

To guarantee investment returns

Answer

To eliminate all financial risks

Answer

To automate accounting processes

Question 8

Which budgeting method allocates every dollar of income to specific expenses, savings, and debt repayment?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Activity-based budgeting

Answer

Value proposition budgeting

Question 9

What does the debt-to-income (DTI) ratio measure in personal financial planning?

Accepted Answer

Debt burden relative to income

Answer

Credit score impact

Answer

Investment risk tolerance

Answer

Tax deduction eligibility