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CFP: Certified Financial Planner

Subjects : certifications, cfp, business-skills

Instructions:

Answer 46 questions in 15 minutes.
If you are not ready to take this test, you can study here.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. The payout ratio
Total Assets / Equity
dividends / earnings
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sales / Average Total Assets

2. EBIT
Earnings Before Interest & Taxes
Total Return (1 - tax bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(P1 + D - P0)/P0

3. Gross Investment income
Price/Earnings per share
Net Worth/Total Assets
taxable interest - non-qual. divs - short-term cap. gains
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

4. Net After Tax Profit Margin
EAT / Sales
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets / current liabilities
Total Liabilities / Equity

5. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Net Worth/Total Assets
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(1/T)(r1+r2+...+rT)
Price/Earnings per share

6. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
assets less liabilities - divided by the number of shares of common stock of a company
Tax Deduction * marginal tax rate
driving - expressive - amiable - analytical

7. Working Capital
Net Income/Equity
Explanatory - Interpretive - Reassuring - Suggestive
current assets - current liabilities
driving - expressive - amiable - analytical

8. After-tax Return
1 - the payout ratio
Total Return (1 - tax bracket)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Earnings After Taxes

9. Holding Period Return
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Price Earnings Growth ratio; P/E divided by projected earnings growth
(P1 + D - P0)/P0
(cash + marketable securities) / current liabilities

10. aka Net Income
Total Long-term Debt / Equity
(current assets - inventory) / current liabilities
Earnings After Taxes
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

11. Book Value (of company stock)
Tax Deduction * marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company
Price/Earnings per share
Sales / Average Total Assets

12. Total Debt to Equity ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

13. After-tax Yield
Sources of Funds-Use of Funds or Money in- Money out
(Mortgage+Debt Repayment)/Net Income
Tax Free Yield/(1 - Tax Bracket)
Earnings After Taxes

14. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sources of Funds-Use of Funds or Money in- Money out
[(1+ NR) / (1 + CCL)] - 1

15. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(cash + marketable securities) / current liabilities
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
[(1+ NR) / (1 + CCL)] - 1

16. Assets to Equity ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Total Assets / Equity

17. 'normal' ratio
assets less liabilities - divided by the number of shares of common stock of a company
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
P*(1+g)/(k-g) P=div per share divided by other div

18. Debt Service Ratio
1 - the payout ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Mortgage+Debt Repayment)/Net Income

19. Times Interest Earned
current assets - current liabilities
Price/Earnings per share
EBIT/I (Where I = Interest Expense)
Net Worth/Total Assets

20. CFP Ethical principles
(current assets - inventory) / current liabilities
Sales / Average Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Free Yield/(1 - Tax Bracket)

21. Opportunities in Financial Planning
driving - expressive - amiable - analytical
Total Long-term Debt / Equity
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
1 - the payout ratio

22. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EBIT/I (Where I = Interest Expense)
EAT / Sales
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

23. Cash Ratio
(Mortgage+Debt Repayment)/Net Income
(cash + marketable securities) / current liabilities
Tax Free Yield/(1 - Tax Bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

24. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Liabilities / Equity
(Mortgage+Debt Repayment)/Net Income
Sales / Average Total Assets

25. Equivalent Tax Credit
Net Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Income/Equity
Tax Deduction * marginal tax rate

26. Savings Ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Price Earnings Growth ratio; P/E divided by projected earnings growth

27. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
(1/T)(r1+r2+...+rT)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sources of Funds-Use of Funds or Money in- Money out

28. Social Styles
driving - expressive - amiable - analytical
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
1 - the payout ratio
Net Worth/Total Assets

29. Present value of a Bond
dividends / earnings
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

30. ROE (Return On Equity)
Total Long-term Debt / Equity
Net Income/Equity
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio

31. P/E ratio
dividends / earnings
Dollars of coupon interest per year/Bond's current market price
Price/Earnings per share
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

32. Sustainable Growth Rate
[(1+ NR) / (1 + CCL)] - 1
P*(1+g)/(k-g) P=div per share divided by other div
g = ROE X b - where b is equal to the retention ratio
Total Assets / Equity

33. Equivalent Tax Deduction
Total Return (1 - tax bracket)
Sales / Average Total Assets
Tax Credit/marginal tax rate
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

34. financial planning pyramid
Sources of Funds-Use of Funds or Money in- Money out
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Sales / Average Total Assets
g = ROE X b - where b is equal to the retention ratio

35. Quick Ratio (aka Acid test)
(Mortgage+Debt Repayment)/Net Income
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(current assets - inventory) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

36. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
(cash + marketable securities) / current liabilities
current assets - current liabilities

37. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
Tax Free Yield/(1 - Tax Bracket)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(cash + marketable securities) / current liabilities

38. The retention ratio
Total Long-term Debt / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
1 - the payout ratio

39. Asset Turnover Ratio
Total Assets / Equity
Sales / Average Total Assets
Sources of Funds-Use of Funds or Money in- Money out
Earnings After Taxes

40. Debt to Equity ratio
Total Long-term Debt / Equity
driving - expressive - amiable - analytical
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Tax Deduction * marginal tax rate

41. Solvency Ratio
Net Worth/Total Assets
assets less liabilities - divided by the number of shares of common stock of a company
(Mortgage+Debt Repayment)/Net Income
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

42. Current Ratio
current assets / current liabilities
Sources of Funds-Use of Funds or Money in- Money out
Explanatory - Interpretive - Reassuring - Suggestive
taxable interest - non-qual. divs - short-term cap. gains

43. PEG ratio
Price/Earnings per share
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets - current liabilities
(Mortgage+Debt Repayment)/Net Income

44. financial life cycle
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
Sales / Average Total Assets
(current assets - inventory) / current liabilities
EAT / Sales

45. Domains of a CFP
(cash + marketable securities) / current liabilities
Price/Earnings per share
Explanatory - Interpretive - Reassuring - Suggestive
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

46. Current Yield of a bond