CFA Practice Question

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CFA Practice Question

Which of the following is the most useful to an analyst assessing the creditworthiness of a company? Information related to ______.

A. operating cash flow
B. the scale and diversity of a company's operations
C. efficiency of a company's operations
Correct Answer: A

Credit analysis is concerned with a company's debt-paying ability. Returns to creditors are normally paid in cash, so the company's ability to generate cash internally is the most important factor in credit analysis.

User Contributed Comments 2

User Comment
robbiecow Credit Analysis involves the evaluation of the 4
"C's" of a company.
1. Character
2. Capacity
3. Collateral
4. Covenants

The four general categories of items considered in credit analysis are:
1. Scale and diversity
2. Op. efficiency
3. Stability and sustainability of prof. margins
4. DFL
Freddie33 DFL?
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