6. Identify situations where global cash flow analysis is appropriate GCFSC. When considering Form 1040 capital gains" as a source of cash in the global cash flow formula, the A reported gain should not be used as a source of cash whether recurring or nonrecurring B. reported gain should be used as a source of cash only if subsequent'asset sales are likely to take place. C. asset selling prices should be used as a source of cashif sales proceeds were not reinvested in another asset. D. asset selling price minus the gain should be excluded to isolate the recaptured depreciation amount 7. Identify situations where global cash flow analysis is appropriate GCFSF. Which of the following interest amounts, reported on the Form 1040 Schedule ("interest and Ordinary Dividends'), should be excluded in the global cash flow formula? A accrued interest on discounted bonds B. Interest from partnerships or other pass-through entities C. interest received from your own financial institution D. verified interest received from your own private mortgages Section 9: Detecting Problem Loans 8. List common management and operating problems that can lead to business failure and loan losses Which of the following events is most likely to lead to business failure? a. Recruiting a new CEO from a major industry competitor b. Failing to achieve budgeted sales growth in one year Receiving a term loan from the majority shareholders d. Controlling personnel costs by hiring family members 9. Identify both financial symptoms and operational and management causes of a company's problem loan, given information about the company's management, operations, external influences, and historical financial statements. Which of the following warning signs of financial difficulty would be less detectable on a company's Financial statement? failure and loan losses Which of the following events is most likely to lead to business failure? a. Recruiting a new CEO from a major industry competitor b. Failing to achieve budgeted sales growth in one year c. Receiving a term loan from the majority shareholders d. Controlling personnel costs by hiring family members 9. Identify both financial symptoms and operational and management causes of a company's problem loan, given information about the company's management, operations, external influences, and historical financial statements. Which of the following warning signs of financial difficulty would be less detectable on a company's financial statement? a. Slow payment of key trade suppliers and delinquent tax payments. b. Deferral of equipment maintenance and cutback on staff training c. Higher line borrowings and sale of production assets d. Lower cash balances and reduction of staff through layoffs. 10. List and accurately describe the five stages of problem loan resolution Once a problem loan has been identified, which of the following best describes the order in which a resolution should be reached? a. Identify the cause/s of the problem, determine resources available to cure the problem and implement a plan to address the problem b. The borrower and banker recognize a problem, then examine internal operations and external factors to determine the cause and assess resources available to address the problem. c. After identifying a problem and determining the cause/s (internal operations and/or external factors), the banker develops a plan to address the problem d. After the internal operational issues and external factors that led to a problem are determined, the banker determines whether to call an event of default 11. Identify and describe benefits and limitations of best-practice processes for analyzing and working with identified problem loans. As part of analyzing a problem loan, a banker will complete all of the following steps EXCEPT a. Complete a new lien search b. Perform an updated financial analysis Hire a turnaround consultant d. Order an updated appraisal oncollateral 12. Describe the four viable problem-loan options outplacement liquidation, bankruptcy, and workout ABC Corporation has encountered financial difficulty in the past year and experienced substantial management tumover during that time. Although loan payments remain current and the bank has 6. Identify situations where global cash flow analysis is appropriate GCFSC. When considering Form 1040 capital gains" as a source of cash in the global cash flow formula, the A reported gain should not be used as a source of cash whether recurring or nonrecurring B. reported gain should be used as a source of cash only if subsequent'asset sales are likely to take place. C. asset selling prices should be used as a source of cashif sales proceeds were not reinvested in another asset. D. asset selling price minus the gain should be excluded to isolate the recaptured depreciation amount 7. Identify situations where global cash flow analysis is appropriate GCFSF. Which of the following interest amounts, reported on the Form 1040 Schedule ("interest and Ordinary Dividends'), should be excluded in the global cash flow formula? A accrued interest on discounted bonds B. Interest from partnerships or other pass-through entities C. interest received from your own financial institution D. verified interest received from your own private mortgages Section 9: Detecting Problem Loans 8. List common management and operating problems that can lead to business failure and loan losses Which of the following events is most likely to lead to business failure? a. Recruiting a new CEO from a major industry competitor b. Failing to achieve budgeted sales growth in one year Receiving a term loan from the majority shareholders d. Controlling personnel costs by hiring family members 9. Identify both financial symptoms and operational and management causes of a company's problem loan, given information about the company's management, operations, external influences, and historical financial statements. Which of the following warning signs of financial difficulty would be less detectable on a company's Financial statement? failure and loan losses Which of the following events is most likely to lead to business failure? a. Recruiting a new CEO from a major industry competitor b. Failing to achieve budgeted sales growth in one year c. Receiving a term loan from the majority shareholders d. Controlling personnel costs by hiring family members 9. Identify both financial symptoms and operational and management causes of a company's problem loan, given information about the company's management, operations, external influences, and historical financial statements. Which of the following warning signs of financial difficulty would be less detectable on a company's financial statement? a. Slow payment of key trade suppliers and delinquent tax payments. b. Deferral of equipment maintenance and cutback on staff training c. Higher line borrowings and sale of production assets d. Lower cash balances and reduction of staff through layoffs. 10. List and accurately describe the five stages of problem loan resolution Once a problem loan has been identified, which of the following best describes the order in which a resolution should be reached? a. Identify the cause/s of the problem, determine resources available to cure the problem and implement a plan to address the problem b. The borrower and banker recognize a problem, then examine internal operations and external factors to determine the cause and assess resources available to address the problem. c. After identifying a problem and determining the cause/s (internal operations and/or external factors), the banker develops a plan to address the problem d. After the internal operational issues and external factors that led to a problem are determined, the banker determines whether to call an event of default 11. Identify and describe benefits and limitations of best-practice processes for analyzing and working with identified problem loans. As part of analyzing a problem loan, a banker will complete all of the following steps EXCEPT a. Complete a new lien search b. Perform an updated financial analysis Hire a turnaround consultant d. Order an updated appraisal oncollateral 12. Describe the four viable problem-loan options outplacement liquidation, bankruptcy, and workout ABC Corporation has encountered financial difficulty in the past year and experienced substantial management tumover during that time. Although loan payments remain current and the bank has
