Certified Executive Compensation Professional Exam (CECP) Free Practice Test

Question 1

The XYZ Company produces innovative products and brings them to market in advance of their competitors. What strategy is XYZ using?

A. Operational excellence

B. Customer intimacy

C. Product/service leadership

D. Brand loyalty

Correct Answer: C

Question 2

Who are you most likely to hear from if there are questions about an employee's compensation?

A. The employee's department head

B. A concerned co-worker

C. The employee's manager

D. The employee

Correct Answer: C

Question 3

Which financial statement or combination of statements provide(s) the most comprehensive view of the company's financial situation?

A. The cash flow statement and the income statement

B. The income statement

C. The balance sheet

D. The cash flow statement, along with the balance sheet and income statement

Correct Answer: D

Question 4

Which of the following best describes present value?

A. The current value of holdings and how much it will grow over time at a given rate of return

B. The difference between the desired value in the future and the current value as a percentage of the desired value

C. The desired value in the future and what needs to be invested today to realize that amount

D. The current value of holdings

Correct Answer: C

Question 5

What best describes a key competency of compensation professionals regarding HR management of the organization's employees?

A. Ensuring that all regulatory and voluntary payroll deductions are properly administered

B. Monitoring individual employee career paths and succession planning

C. Ensuring they are appropriately selected, developed, appraised and rewarded

D. Communicating regularly with line management on performance management

Correct Answer: C

Question 6

Which of the following is the earnings available to equity owners after paying debt and taxes?

A. Operating profit

B. EBIT

C. Net income

D. EPS

Correct Answer: C

Question 7

The XYZ Company opened a new manufacturing facility with a capital investment of 10,000,000. The cost to obtain the capital was 8%. In its first year of operations, the facility's net operating profit after taxes was 10,500,000. What was the economic value added (EVA) using the EVA formula?

A. 9,700,000

B. 8,000,000

C. 500,000

D. 840,000

Correct Answer: A

Question 8

What metric should compensation professionals pay closest attention to for ensuring alignment between the compensation strategy and the HR and business strategies?

A. Variable pay costs as a percent of total compensation

B. Reward costs as a percent of total operating costs

C. Total compensation expense for the business, including base pay and variable pay

D. The organization's market compa-ratio

Correct Answer: B

Question 9

What most accurately describes a reason why organizations use financial reports?

A. To differentiate company financial data from industry competitors to prevent loss of proprietary information

B. To create a historical record of financial performance and identify trends that may justify changes in strategy

C. To provide subjective information to key constituents that reflects the company's performance in the most favorable manner depending on stakeholder priorities

D. To promote consistency of communication regarding company performance and value

Correct Answer: D

Question 10

What best describes a use of strategic analysis?

A. Understanding your business and its competitive strengths and weaknesses

B. Pricing your products appropriately

C. Forecasting profit, growth and investment performance to develop realistic budgets

D. Evaluating prior year performance for the narrative portion of annual financial reports

Correct Answer: A

Welcome to TestSimulate

WorldatWork Certified Executive Compensation Professional (CECP) Free Practice Test