CLP Credit and Financial Analysis

Question 1

What financial metric is most commonly used to evaluate a business’s ability to repay debt?

Accepted Answer

Debt Service Coverage Ratio

Answer

Current Ratio

Answer

Gross Profit Margin

Answer

Return on Assets

Question 2

Which document provides the most comprehensive view of a company’s financial health?

Accepted Answer

Audited financial statements

Answer

Invoice history

Answer

Sales receipts

Answer

Bank deposit slips

Question 3

When analyzing a business credit application, what does a high current ratio typically indicate?

Accepted Answer

Strong liquidity

Answer

Low profitability

Answer

High long-term debt

Answer

Low asset turnover

Question 4

Which factor is LEAST relevant when assessing personal guarantees in lease underwriting?

Accepted Answer

Personal hobbies

Answer

Credit score

Answer

Personal financial statement

Answer

Tax returns

Question 5

What is a key red flag when analyzing a lease applicant’s financial statements?

Accepted Answer

Negative cash flow

Answer

Growing net income

Answer

Positive retained earnings

Answer

Increase in total assets

Question 6

Which of the following is a primary source of financial data used in credit evaluation?

Accepted Answer

Tax returns

Answer

Social media activity

Answer

Customer reviews

Answer

Sales brochures