159 Questions
What is the main purpose of the Cash Flow Statement?
To report the changes in a company's cash and cash equivalents
What is the result of the Cash Flow from Financing activities?
Cash received from issue of shares or debt and borrowing minus cash paid for dividend, repaying short and long-term borrowing and reacquisition of debt or capital
What is the purpose of adjusting for non-operating gains and losses in the Cash Flow Statement?
To exclude non-cash items from the cash flow statement
What is the classification of the Cash Flow Statement that includes dividends paid and repayment of debt?
Cash Flow from Financing Activities
What is the purpose of the Cash Flow Statement in financial analysis?
To analyze a company's liquidity position and ability to generate cash
What does the statement of cash flows help the financial manager/bankers to assess?
A company's ability to generate future net cash inflows from operations
What is the main purpose of segregating cash inflows and outflows into three broad categories?
To identify the reasons for differences between net income and net cash flow from operating activities
Which of the following is NOT a category of activities in the statement of cash flows?
Dividend activity
What does the statement of cash flows explain?
Changes in a company's cash and cash equivalents
What is the primary revenue-producing activity listed in the statement of cash flows?
Operating activity
What is the purpose of the Cash Flow from Investing Activities section in the Cash Flow Statement?
To report investments made in property, plant, and equipment, and other non-current assets
What is the result of combining the Net Cash Flow from Operating, Investing, and Financing Activities?
The change in a company's cash balance over a period of time
What type of financing is represented by an increase in Long-term Loans/Bonds Payable?
Debt financing
What is the purpose of the Cash Flow from Financing Activities section in the Cash Flow Statement?
To report changes in a company's cash position due to financing activities, such as borrowing and repayment of loans
What is the relationship between the Opening Cash & Bank Balance and the Cash Balance on hand at the end of the year?
The Opening Cash & Bank Balance is added to the Cash Balance on hand at the end of the year
What is the implication of a positive net financing cash flow if it is the result of excessive borrowing?
It will have an adverse effect on the debt-equity ratio and debt servicing capacity of the firm.
What is the primary concern of a credit analyst when analyzing a firm's cash flow profile?
Understanding the tradeoff between tax advantages and bankruptcy costs.
What does a negative net financing cash flow indicate?
The firm has repaid existing loans or distributed more dividends.
What is the primary consideration when evaluating a firm's capital expenditure in line with its business strategy?
Consistency of capital expenditure.
What is the significance of a positive net financing cash flow if it is the result of an increase in equity capital?
It is a sign of a healthy financial position.
What is the result of Cash Flow from Operations?
Cash received from sale of goods and services minus cash paid for operations and goods & services
What is the purpose of the investing activity in the Cash Flow Statement?
To record the acquiring and disposing activities of long term assets and investments
What is an example of a cash outflow from financing activity?
Cash paid to repay debt
What is an example of a cash inflow from operating activity?
Cash received from selling goods and services
What is an example of a cash outflow from operating activity?
Cash paid to pay suppliers for inventory
What is the total value of Assets of Sohana Ltd. as at December 31, 2019?
Tk. 277,000
What is the value of Plant Assets sold during the year ended December 31, 2019?
Tk. 62,500
What is the value of Bonds redeemed at face value during the year ended December 31, 2019?
Tk. 60,000
What is the value of Cash Dividends declared and paid during the year ended December 31, 2019?
Tk. 8,500
What is the value of Additional Equipment purchased during the year ended December 31, 2019?
Tk. 60,000
What is the value of Total Liabilities and Equity of Sohana Ltd. as at December 31, 2019?
Tk. 283,500
What is the value of Accrued Expenses of Sohana Ltd. as at December 31, 2019?
Tk. 13,000
What is the value of Retained Earnings of Sohana Ltd. as at December 31, 2019?
Tk. 123,000
What is the value of Cost of Goods Sold of Sohana Ltd. for the year ended December 31, 2019?
Tk. 500,000
What is the total net cash flow from operating activities?
Tk. 128,500
What does a large amount of positive net operating cash flows indicate?
Economic viability of a firm
What is the main reason behind negative net operating cash flows?
Increase in inventory and account receivable
What is the total cash sales collection from credit sales?
Tk. 1,024,000
What is the ending cash balance on hand?
Tk. 42,900
What is the primary concern of a short-term creditor when evaluating a loan?
The borrower's ability to pay obligations when they come due
What is the primary emphasis of a bondholder when evaluating a company?
Profitability and solvency
What is the primary objective of financial statement analysis?
To evaluate the company's past performance and current financial position
What is the primary purpose of analyzing an income statement and balance sheet?
To assess a company's financial health
What is the primary focus of stockholders when assessing a company?
Profitability and solvency
What is the primary objective of sensitivity analysis in project financial appraisal?
To identify the project's most critical variables
What is a key consideration in evaluating a project's capital structure?
The project's financial risk
What is the primary purpose of ratio analysis in financial statement analysis?
To evaluate the operating and financial performance of a firm
What is the primary purpose of cash flow statement analysis in project financial appraisal?
To determine the project's cash flow generation
What type of ratio measures the company's potentiality and performance?
Growth Ratio
What is a key consideration in evaluating a project's working capital requirements?
The project's asset structure
What can be evaluated through ratio analysis?
Financial strength and weakness of a firm
What is the primary objective of financial projection and preparation of projected financial statements in project financial appraisal?
To forecast the project's financial performance
What is the main advantage of using ratio analysis in financial statement analysis?
It enables to understand the actual financial condition of a firm
What is the relationship between two figures expressed through a ratio?
Mathematical relationship
What is the primary purpose of segregating cash inflows and outflows into three broad categories in the statement of cash flows?
To distinguish between the company's ability to generate cash and its ability to generate profits
What can a company's ability to generate future net cash inflows from operations indicate to financial managers or bankers?
The company's ability to pay its debts and dividends
What can be inferred about a company if its net cash flow from operating activities is consistently higher than its net income?
The company is generating cash from its core operations
What can be a potential consequence of a company's reliance on external financing to meet its liquidity needs?
Increased debt burden
What can be a key benefit of analyzing a company's statement of cash flows in conjunction with its other financial statements?
Assessing the company's ability to generate cash and manage its liquidity
What is the classification of the current liabilities 'Short Term Bank Borrowings' in the balance sheet of Ahmed Toys (Pvt.) Limited?
Short-term Bank Borrowings
What is the purpose of analyzing the 'Due from Affiliates' account in the balance sheet of Ahmed Toys (Pvt.) Limited?
To determine the liquidity of the company
What is the relationship between the 'Retained Earnings' account and the 'Net Worth' of Ahmed Toys (Pvt.) Limited?
Retained Earnings is a component of Net Worth
What is the purpose of analyzing the 'Inventory' account in the balance sheet of Ahmed Toys (Pvt.) Limited?
To determine the liquidity of the company
What is the classification of the 'Tangible Fixed Assets' account in the balance sheet of Ahmed Toys (Pvt.) Limited?
Non-Current Asset
What may indicate that a firm has either repaid existing loans or distributed more dividends?
Negative net financing cash flow
What is a credit analyst trying to understand when analyzing a firm's tradeoff between tax advantages from increased debt and bankruptcy cost?
The firm's cash flow profile
What is essential when considering a firm's capital expenditure in line with its business strategy?
Consistency with business strategy and growth opportunities
What does a positive net financing cash flow indicate if it is the result of an increase in equity capital?
The firm is financially healthy
What is a primary concern for a credit analyst when analyzing a firm's cash flow profile?
The firm's ability to manage its tradeoff between tax advantages and bankruptcy cost
What does the Total Liability to Net Worth ratio measure?
The extent to which debt financing is used relative to equity financing
What is the primary purpose of a Cash Flow Statement?
To report the cash receipts, cash payments, and net change in cash of a firm
What type of ratio analysis is useful for evaluating a firm's liquidity?
Liquidity ratio analysis
What is the name of the ratio that measures the extent to which debt financing is used relative to equity financing?
Total Liability to Net Worth ratio
What is the primary focus of financial statement analysis?
To evaluate the performance of a firm and make informed decisions
What is the name of the statement that reports a firm's cash receipts, cash payments, and net change in cash?
Cash Flow Statement
What is the primary purpose of ratio analysis in financial statement analysis?
To identify trends and patterns in a firm's financial data
What is the name of the ratio that measures the extent to which a firm has been financed by debt?
Leverage ratio
What is the primary purpose of segregating cash inflows and outflows into three broad categories in the Cash Flow Statement?
To identify the sources and uses of a firm's cash
What is the main advantage of using ratio analysis in financial statement analysis?
It helps to identify trends and patterns in a firm's financial data
What does the Inventory in Days ratio indicate?
The average number of days the inventory is held before it is turned into accounts receivable through sales
What is the rule of thumb for the Sales to Total Assets ratio?
Higher is better
What does the Quick Ratio measure?
A company's ability to meet its current debts with its most liquid assets
What is the rule of thumb for the Working Capital Components ratio?
Higher is better
What does the Current Ratio measure?
A company's ability to meet its current debts with its current assets
What is a primary concern for a short-term creditor when evaluating a borrower?
Liquidity
What is the primary purpose of financial statement analysis?
To evaluate a company's past performance and current financial position
What does a long-term creditor consider when evaluating a firm?
Profitability and solvency
What is the primary objective of analyzing an income statement and balance sheet?
To assess a company's profitability and solvency
What is a key consideration for stockholders when assessing a company?
Profitability and solvency
What is the main purpose of ratio analysis in financial statement analysis?
To evaluate financial performance of a firm and identify its strengths and weaknesses
What does a ratio express in financial analysis?
A mathematical relationship between two figures
What is the primary focus of financial statement analysis?
To analyze the financial performance of a firm and make informed decisions
What is the purpose of segregating cash inflows and outflows into three broad categories in the cash flow statement?
To analyze the cash flows of a firm from different activities
What can be evaluated through ratio analysis?
All of the above
What is the main purpose of leverage ratios?
To measure the extent to which a firm has been financed by debt
What type of ratio analysis is useful for evaluating a firm's liquidity?
Liquidity ratios
What is the primary purpose of a Cash Flow Statement?
To summarize a firm's cash inflows and outflows
What does a high Total Liability to Net Worth ratio indicate?
A high level of debt financing
What is the implication of a negative net financing cash flow?
The firm has either repaid existing loans or distributed more dividends.
What is the name of the ratio that measures the extent to which debt financing is used relative to equity financing?
Total Liability to Net Worth ratio
What is a credit analyst trying to understand when analyzing a firm's cash flow profile?
The firm's tradeoff between tax advantages from increased debt and bankruptcy cost.
What is the primary concern of a credit analyst when analyzing a firm's cash flow profile?
The firm's tradeoff between tax advantages from increased debt and bankruptcy cost.
What does a positive net financing cash flow indicate if it is the result of an increase in equity capital?
The firm is relying on equity capital to fund its operations.
What is the primary objective of analyzing a firm's cash flow statement?
To evaluate the firm's liquidity position.
What does the Interest Coverage Ratio measure?
The ability of a company to generate cash to pay interest and principal repayments
What does the Debt Service Coverage Ratio reflect?
The ability of a company to serve its long-term debt
What is the purpose of Activity Ratios in financial statement analysis?
To evaluate a company's efficiency in utilizing its assets
What does the Receivable in Days ratio indicate?
The average number of days it takes to collect accounts receivable
What is the rule of thumb for the Interest Coverage Ratio?
Higher is better
What is the main objective of industry analysis in a marketing plan?
To identify the main sources of competitive forces that lie within the industry
What is included in a market analysis?
All of the above
What is the primary consideration when analyzing the marketing aspect of a project?
Both a and b
What is the primary objective of analyzing the company's internal environment?
To analyze the company's competencies and resource strengths
What is the primary purpose of Porter's Five Forces model?
To identify the main sources of competitive forces that lie within the industry
What is the primary focus of marketing analysis?
Industry analysis
What is the primary purpose of analyzing consumer behavior?
To understand consumer attitudes and preferences
What is included in a marketing analysis?
All of the above
What is the primary purpose of identifying the company's external environment?
To analyze the company's external environment
What is the primary focus of a marketing plan?
Industry analysis
What is the primary purpose of Internal Credit Risk Rating System?
To facilitate the portfolio management activities
What should be used to assess the line of business if the borrower is in multiple lines of business?
The sector with the highest revenue and/or profit
What is the authority to sanction/approve loans delegated to?
Managing Director (MD)/Chief Executive Officer (CEO) and Board of Directors (BOD)
What should be used if the right sector or industry is not selected?
Other industry
What is the purpose of Internal Credit Risk Rating System in credit selection?
To be used for individual credit selection, credit pricing, and setting credit limit and terms and conditions
Who is responsible for identifying early alert accounts and reporting them to CRM?
Relationship Manager
What is the primary responsibility of the Recovery Unit in each bank?
To determine recovery strategy and pursue all options to maximize recovery
Who is responsible for approving the Classified Loan Review Report for NPLs up to a certain percentage of the bank's capital?
Head of Credit
What is the primary focus of the account manager in the Recovery Unit?
To coordinate and administer the action plan and serve as the primary customer contact
What is the significance of reviewing the strategy and adequacy of provisions for NPLs?
To ensure timely loan loss provisioning
What is the primary objective of credit investigation?
To identify good borrowers and prevent bad credit
Why is it essential to select a good borrower?
To ensure loan repayment and minimize credit risk
What is the primary focus of a banker when sanctioning credit?
To ensure loan repayment and minimize credit risk
Why is curative measure costlier than preventive measure in credit risk management?
Because curative measures require more time and money
What is the purpose of collecting information from different parties, including the Credit Information Bureau (CIB) report?
To assess the creditworthiness of the borrower
What is the primary purpose of Internal Credit Risk Rating System (ICRRs)?
To provide a granular, objective, transparent, consistent framework for the measurement and assessment of borrowers' credit risk
What is the key reference for credit risk assessment and decision making?
Internal Credit Risk Rating (ICRR) score
What is considered during the credit assessment of a borrower?
Liquidity, cash flow, profitability, debt profile, market indicators, and industry background
Why do participatory banks perform their own independent assessment and review of terms of the syndicate loan?
To mitigate their own credit risk
What is the term used to describe the credit assessment of a group of companies?
Obligor
What is the next step after the credit proposal is approved by the approval authority?
Sending the approved proposal to Credit Administration
Who should take legal action against defaulted borrowers as a last resort to recovery credit?
Recovery Unit (RU)
What is the purpose of introducing an incentive program for Recovery Unit (RU)?
To encourage RU to bring down the NPLs
What is the role of the Board in credit risk management?
To receive a copy of the credit proposal approved by the MD/CEO
What is the function of the Credit Administration (CAD) in credit operations?
To issue sanction advice and ensure compliance
What is the main purpose of credit risk management in banks?
To manage risk and return
What is the significance of a well-defined credit policy in banks?
To ensure good credit portfolio
Why is credit risk management critical for banks?
Because it helps in managing risk and return
What is the importance of credit assessment in banks?
To determine creditworthiness of borrowers
What percentage of total assets of commercial banks in Bangladesh constitute loans and advances?
65%
What is the primary purpose of the procedural guidelines in a bank's credit operation?
To manage credit risk
Who is responsible for sanctioning and disbursing the credit budget in a bank?
Credit Committee/CRM
What is the primary role of Relationship Management (RM) in a bank?
To act as a primary bank contact with a borrower
What is the primary purpose of the credit budget in a bank?
To allocate funds for lending
What is the overall sequence of activities involved in credit operations in a bank?
Discussion between bank and client, loan disbursement, loan recovery
What is the purpose of the credit committee/CRM in a bank?
To review and approve loan proposals
What is the primary focus of a bank's credit policy?
To minimize credit risk
What is the role of Bangladesh Bank in guiding a bank's credit operations?
To provide guidelines for credit risk management
What is the primary consideration in a bank's credit operations?
Minimizing credit risk
What is the purpose of a bank's procedural guidelines in credit operations?
To manage credit risk
Assess a company's financial health by analyzing its ability to generate cash inflows, need for external financing, and the differences between net income and net cash flow. Learn how to identify key financial metrics and make informed decisions.
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