PFIA Flashcards
In what order are assets listed on a financial statement?
In order of liquidity
What are three options for verifying the value of real estate?
Valucheck, tax assessment, and comparable sales
What are three ways to verify the value of an automobile?
Recent purchase order (if new), NADA guide, and Kelly Blue Book
T/F: the bank should transfer the most conservative figures to the PFIA?
True
% used in place of unknown payment amount on a loan to determine if borrower can repay loan.
Payment Factor
Calculation of months of total debt coverage based on the level of current assets.
Current Assets / Monthly Payments
How many months of debt coverage by assets is preferred?
12 months
Indicates the level of a borrowers financial leverage.
Debt / Asset Ratio
What is considered a strong debt to asset ratio?
50% or less
What should most of the information for the PFIA come from?
Tax Return
A non cash expense to account for the decrease in value of assets due to age.
Depreciation
A non cash expense related to earlier cash expenditures that can be periodically deducted over time.
Amortization
A non cash expense to account for the use or consumption of mineral resources.
Depletion
Annualized debt payment figure.
Total Cash Required to Service Debts (TCR)
Remaining cash after all existing debt has been serviced.
Residual Income
Debt Servicing Ratio (DSR)
TCA / TCR
Residual Income
TCA - TCR
DSR required for RI of $90,000
1.5
DSR required for RI of $50,000 - 90,000
1.7
DSR required for RI of $30,000 - 50,000
2.0
DSR required for RI less than $30,000
2.5
PFIA income statement shows current ________ income.
Annualized
On a PFIA that does not show any housing or rent expense what amount should be included for CO residents?
$500
A customer bankruptcy older than _____ years old should not be taken into account.
7
