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Free CFA Financial Statement Analysis Practice Questions & Answers

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Question 451

Over three years, a company shows the following pattern: - Revenue growth: +8%, +6%, +4% - Operating margin: 12%, 11%, 10% - Operating cash flow: flat - Capital spending: rising What is the most likely interpretation?

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Question 452

A company’s free cash flow is negative for three years, but: - Operating cash flow is positive - Capital spending is rising - Debt levels are stable - Cash balance is rising What explains the rising cash?

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Question 453

A company’s revenue is flat, but: - Receivables rise - Inventory falls - Payables fall - Operating cash flow falls What is the dominant driver of falling cash flow?

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Question 454

A company capitalizes more development costs. Which combination of effects is most likely?

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Question 455

A company’s depreciation falls, but: - Operating cash flow stays flat - Profit rises - Asset turnover falls What explains this?

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Question 456

A company’s net income rises, but: - Operating cash flow falls - Investing cash flow is positive - Financing cash flow is negative What is the most likely explanation?

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Question 457

A company’s cash flow from operations rises, but free cash flow falls. What combination explains this?

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Question 458

A company’s long‑term debt rises, but its credit rating improves. What explains this?

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Question 459

A company’s receivables turnover rises while payables turnover falls. What does this indicate?

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Question 460

A company’s profit rises, but: - Operating cash flow falls - Receivables rise - Inventory rises - Payables fall What is the strongest red flag?

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Question 461

A company reports stable margins, but: - Cash flow is volatile - Working capital swings widely - Debt rises - Auditor flags internal control issues What is the most likely concern?

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Question 462

A company’s debt rises, but interest expense falls and cash flow improves. What explains this?

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Question 463

A company’s cash balance rises, but: - Operating cash flow is negative - Investing cash flow is negative - Financing cash flow is positive What is the likely source of cash?

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Question 464

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Question 465

When a company receives payment before delivering goods or services, the initial accounting entry most likely includes:

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Question 466

When revenue is recognized but payment is conditional on future performance, the company records:

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Question 467

Assets of a discontinued operation are classified as:

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Question 468

Under the treasury stock method, the assumed cash received from option exercise is used to:

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Question 469

A contract liability decreases when:

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Question 470

A contract asset becomes a receivable when:

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Question 471

Period costs include:

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Question 472

A contract liability is most likely created when:

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Question 473

Capitalized interest appears on the cash flow statement as:

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Question 474

A contract asset arises when:

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Question 475

An intangible asset is considered “identifiable” when it:

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Question 476

Which of the following is not an identifiable intangible asset?

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Question 477

Under IFRS, the revaluation model for intangible assets may be used only when:

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Question 478

Under US GAAP, intangible assets must be measured using:

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Question 479

An intangible asset with a finite useful life is:

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Question 480

An intangible asset with an indefinite useful life must be:

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Free CFA Financial Statement Analysis Practice Questions & Answers

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