Financial Analysis and Reporting Flashcards
7 cards from real CPHR 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 and Reporting flashcards as text
When HR prepares a headcount forecast, what does 'attrition rate' directly inform?
Answer: Projected number of positions that will need to be backfilled
Attrition rate predicts how many current employees will leave, directly driving backfill hiring demand in workforce planning.
A company's income statement shows revenue of $5M, COGS of $3M, and operating expenses of $1.2M. What is the operating income?
Answer: $800,000
Operating income = Revenue − COGS − Operating Expenses = $5M − $3M − $1.2M = $800,000.
Which financial analysis technique compares each line item on a financial statement as a percentage of a base figure, such as total revenue?
Answer: Vertical analysis
Vertical analysis expresses each line item as a percentage of a base figure (e.g., revenue on income statement, total assets on balance sheet).
HR is evaluating two compensation structures. Plan A has a higher fixed salary cost, while Plan B uses more variable incentive pay. In a revenue downturn, which plan better protects the organization?
Answer: Plan B, because variable costs decrease naturally with lower performance
Variable pay plans reduce compensation expenses automatically when performance metrics decline, providing cost flexibility during revenue downturns.
What is 'break-even analysis' used to determine in HR financial planning?
Answer: The point at which an HR program's benefits equal its costs
Break-even analysis identifies the point where the benefits of an HR investment exactly equal its total costs, after which net value is positive.
Which of the following best describes a 'fully loaded cost' when analyzing HR program expenses?
Answer: All direct and indirect costs, including overhead and staff time
Fully loaded costs include every expense associated with a program: direct costs, overhead allocation, internal staff time, and related benefits/taxes.
An HR analyst notices that training spend as a percentage of payroll has dropped from 3% to 1.5% over three years. This is best described as what type of analysis?
Answer: Horizontal (trend) analysis
Horizontal analysis (trend analysis) compares the same metric across multiple time periods to identify directional changes.