Financial Analysis & Reporting Flashcards
7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Analysis & Reporting flashcards as text
A fintech lender uses alternative data (e.g., rent payment history, utility bills) to supplement credit bureau data. This primarily enhances which component of financial analysis?
Answer: Credit risk assessment and underwriting accuracy
Alternative data expands the credit underwriting data set, enabling more accurate default probability estimates especially for thin-file borrowers.
Which statement best describes the 'unit economics' framework commonly used in fintech financial analysis?
Answer: Measuring profitability at the level of an individual customer or transaction
Unit economics examines revenues and costs at the level of a single customer or transaction to determine per-unit profitability.
A digital asset custodian holds crypto assets on behalf of clients. Under current US GAAP guidance (SAB 121), how must this liability be treated?
Answer: Recorded as both an asset and corresponding liability on the balance sheet
SEC Staff Accounting Bulletin 121 requires entities holding crypto assets for customers to record both the asset and a corresponding liability on their balance sheet.
In evaluating a fintech's cash flow statement, 'stock-based compensation' is added back in the operating activities section because it is:
Answer: A non-cash expense that reduced net income but did not use cash
Stock-based compensation reduces GAAP net income but involves no cash outflow, so it is added back when reconciling to operating cash flow.
A fintech company reports a Price-to-Sales (P/S) ratio of 15x. An analyst considers this high. Which factor would most justify the elevated P/S ratio?
Answer: Rapid revenue growth trajectory with a scalable, asset-light business model
High P/S multiples are justified when investors expect rapid revenue compounding from a scalable model even if current profits are low.
When a bank partnership fintech (BaaS model) reports gross revenue, it should deduct which item to arrive at net revenue?
Answer: Interchange fees and bank partner pass-through costs
BaaS fintechs deduct interchange and bank partner pass-through costs from gross revenue to show net revenue attributable to the platform.
A fintech CFO is preparing a 13-week cash flow forecast. This tool is primarily used to:
Answer: Manage short-term liquidity and identify cash timing gaps
The 13-week cash flow forecast is a short-term liquidity management tool that tracks weekly cash inflows and outflows to prevent shortfalls.