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Free CFA Financial Statement Analysis Practice Questions & Answers

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Question 331

A company’s cash conversion cycle becomes negative. What does this indicate?

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Question 332

Which action reduces liquidity risk?

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Question 333

A company issues long‑term bonds to repay short‑term loans. What improves?

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Question 334

A company’s free cash flow yield rises. What does this imply?

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Question 335

A company’s profit rises while cash flow from operations falls. What does this most likely indicate?

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Question 336

Which situation most likely signals aggressive revenue recognition?

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Question 337

Which of the following most likely reduces accruals?

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Question 338

A company writes down inventory. What is the effect?

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Question 339

A company’s long-term debt increases. What happens?

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Question 340

A company refinances short-term debt with long-term debt. What improves?

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Question 341

A company’s interest expense rises. What is the likely effect?

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Question 342

Which trend is a warning sign?

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Question 343

Which situation suggests possible manipulation?

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Question 344

A company’s current ratio increases from 1.2 to 1.6. What is the most likely reason?

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Question 345

A company’s quick ratio falls while its current ratio stays the same. What explains this?

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Question 346

A company replaces long‑term debt with short‑term debt. What happens?

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Question 347

A company issues new shares to repay debt. What happens?

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Question 348

A company’s operating cash flow rises while profit stays flat. What explains this?

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Question 349

A company’s free cash flow falls even though operating cash flow rises. What explains this?

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Question 350

A company’s cash flow from operations is consistently lower than profit. What is the likely cause?

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Question 351

A company’s inventory turnover rises. What does this indicate?

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Question 352

A company’s receivables turnover falls. What does this imply?

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Question 353

A company’s payables turnover rises. What does this imply?

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Question 354

A company’s profit margin rises but cash flow falls. What is the likely cause?

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Question 355

A company’s auditor issues a warning about uncertainty in future operations. What does this indicate?

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Question 356

A company reduces its inventory levels without reducing sales. What happens?

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Question 357

A company’s current liabilities rise while current assets stay constant. What happens?

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Question 358

A company shortens its payment terms to customers. What is the likely effect?

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Question 359

A company’s quick ratio rises while its current ratio stays the same. What explains this?

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Question 360

A company’s cash conversion cycle becomes shorter. What does this imply?

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Free CFA Financial Statement Analysis Practice Questions & Answers

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