12/11/23, 12:02 PM Take Test: Diagnostic Test – Proposing Business Solutions &...

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12/11/23, 12:02 PM Take Test: Diagnostic Test – Proposing Business Solutions &...

Take Test: Diagnostic Test – Proposing Business Solutions

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Multiple Attempts Not allowed. This test can only be taken once.
Force Completion Once started, this test must be completed in one sitting. Do not leave the test before clicking Save and Submit.
Your answers are saved automatically.

QUESTION 1
1 points
Most banks now use an automated credit approval system. If you have a loan application that is declined by the automated credit approval system, what option do you have?Save
a. You must turn down the loan application.
b. You may refer the loan for “manual adjudication”.
c. You may reduce the loan request and re-submit the application. 1 points Save
d. You may refer the loan application to your manager for their approval.
e. I am not sure.
QUESTION 2
Your bank’s small business automated credit approval system has a 3:1 debt ratio as the maximum allowable. If your application has a 2.5:1 ratio, what should the outcome be?
a. The loan is declined.
b. The loan is deferred.
c. The loan is referred for manual adjudication. 1 points Save
d. The loan is approved.
e. I am not sure.
QUESTION 3
What does it mean when we say that the minimum level of debt service coverage is 1.2 times?
a. Accounts receivable need to be at least 1.2 times the amount of the business operating loans.
b. Total business assets need to be at least 1.2 times total business loans.
c. The business should generate at least $1.20 of free cash flow for each $1.00 of debt service. 1 points Save
d. The business should generate at least $1.20 of profit for each $1.00 of debt service.
e. I am not sure.
QUESTION 4
What are the 5 Cs of Credit?
a. Cash Flow, Collateral/Security, Capital, Conditions, Character.
b. Cash Flow, Collateral/Security, Credit History, Capital, Conditions.
c. Cash Flow, Collateral/Security, Capacity, Conditions, Capital. 1 points Save
d. Capital, Conditions, Credit History, Character, Cash Flow.
e. I am not sure.
QUESTION 5
Sometimes there are additional conditions placed on small business loans to reduce credit risk. What is another name often used for these conditions?
a. Obligations.
b. Understandings.
c. Caveats. 1 points Save
d. Covenants.
e. I am not sure.
QUESTION 6
Before properly pricing a loan, what must a financial institution do first?
a. Determine the amount of risk involved.
b. Determine the amount of security available.
c. Determine the maximum repayment period. 1 points Save
d. Confirm the identification of the borrower.
e. I am not sure.
QUESTION 7
When would a business encounter business registration fees?
a. During its expansion phase.
b. Assisting with cash flow management.
c. As part of business operating costs. 1 points Save
d. When starting a new business.
e. I am not sure.
QUESTION 8
Company
Click Save andA has been
Submit toasave
client
andof submit.
your bank for Save
Click 12 years with an excellent
All Answers repayment
to save all answers.record. Company B is a new borrower who comes recommended by your best client. Compa
client who transferred their business from another bank because they liked your credit proposal. Which company or companies should get the best loan pricing?
a. Company C.
b. Company B.
1 i t S
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12/11/23, 12:02 PM Take Test: Diagnostic Test – Proposing Business Solutions &...
p y
1 points Save
c. Company A.
d. Both companies A and C.
e. I am not sure.
QUESTION 9
What do installment loans provide financing for?
a. Cash flow shortfalls.
b. Working capital.
c. Capital investments. 1 points Save
d. Inventory financing.
e. I am not sure.
QUESTION 10
Laura’s Landscaping is coming to you for assistance related to their day-to-day operations. The business is doing well, and even purchased a truck for $30,000 in the past year, w
need to borrow. However, during their slow period they are pushing their limits of the operating line of credit. What would you say is an appropriate credit solution?
a. Increase in operating line of credit to cover shortfalls.
b. Temporary increase of the operating line of credit during the slow period.
1 points Save
c. Short-term loan for 5 years to finance the truck purchase.
d. Long-term loan for 8 years to finance the truck purchase.
e. I am not sure.
Q U E S T I O N 11
The duration of a “short-term” loan is usually how long?
a. Five years or less.
b. Three years or less.
c. One year or less. 1 points Save
d. Six months or less.
e. I am not sure.
QUESTION 12
What type of bank facility would be most appropriate to assist a company with its cash flow management?
a. Short-term loan.
b. Line of credit.
c. Intermediate-term loan.
d. Long-term loan.
e. I am not sure.

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