CMA-Strategic-Financial-Management Free Exam Questions & Answers PDF Updated on Dec-2022 [Q67-Q87]

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CMA-Strategic-Financial-Management Free Exam Questions and Answers PDF Updated on Dec-2022

Latest CMA-Strategic-Financial-Management Exam Dumps Recently Updated 125 Questions

NO.67 A foreign subsidiary of a U S company has an intercompany loan from the parent company. Which one of the following statements about the subsidiary’s functional currency is true?

It should be the U S dollar if the local currency is hyper inflated

It should be determined by the management of the U.S. Company

It is the US dollar because the parent company is in the US

It is the U S dollar because the subsidiary has an intercompany loan from the parent company

NO.68 FumiSelf is a global manufacturer of consumer-assembled furniture with a business presence in nearly every country. The Vice President of Production was presented with the following information by the Vice President of Finance as of the end of the current quarter.

Asian division has the highest days’ sales in inventory

North American division has the lowest days’ sales in Inventory.

African division is the most efficient in manage its inventory

Europe division is the most inefficient in managing its inventory

NO.69 The production process of a company s main product yields a by-product Production costs or $700,000 are incurred during this process and $300,000 m additional costs are incurred to finalize the main product. The by-product can be sold for $200 000 without further processing A manager proposed the conversion of the by-product into another product that would cost $100,000 and generate revenue of $250,000. When deciding on this proposal the company should

select an approbate cost allocation method to allocate the $1 100 000 joint costs

evaluate whether other nonfinancial factors outweigh the Si 50.000 in incremental income

treat the $100,000 conversion cost as the marginal cost 1o produce the new product

ignore the $200 000 sales revenue for the by-product because it Is irrelevant

NO.70 A company can by identical raw materials from four suppliers. Each supplier offers a different term of sale.
Which one of the following terms of sale has the highest effective annual interest rate if the company does not take the cash discount?

1/10, net 90

1/30, net 90

1/10, net 45

1/30 net 45

NO.71 A retail company sells numerous products m its one department store. The income statements tot two of these products are shown below

After reviewing the income statements, the president is considering drooping one or both products. Which produces), if any should the company discontinue?

Both Product A and Product B

Product A only

Product B only

Neither Product A nor Product B

NO.72 Risk maps are used in companies’ enterprise risk management system because risk maps

provide a quantitative tool that measures the probability of occurrence and the potential impact to calculate a potential loses

rank risks Based on the potential loss that could occur it a risk were to materialize

are a generic set of risks for the company’s industry that can then be used as a foundation for further risk-identification techniques to specify the risks relevant for the company.

compares the impact of a risk and the likelihood of occurrence to provide a qualitative assessment of the risk

NO.73 Which one of the following situations describes a secondary offering of stock by a company?

The company has an initial public offering of its stock and its investment bank needs to add mote shares to the initial public offering to meet excess demand by investors

After the lockup period of the initial public offering ends, the company 3 founders sell some of their shares to the public

The company repurchases shares of its stock in the open market, but it then later sells these shares in the open market

After completing its initial public offering, the company sells more new shares of its stock

NO.74 Delman inc considering upgrading its manufacturing facility, and it is expected that the new equipment will cost $180,000. The project’s is considering similar to the risk of the firm’s other investments. the after-tax cash inflows attribute to this project are expected to increase by $50,000 every year over the next five years. The firm’s marginal tax rate is 30%, its debt-to-equal ratio (using market values) is 60%, and its pre-tax cost of debt and equity are 8% and 12% respectively. the weighted average cost of capital appropriate for evaluating this project is closest to

8.0%

8.2%

9.6%

10.5%

NO.75 A company has hired a consultant to propose a way to increase the company’s revenues. The consultant has evaluated two mutually exclusive projects with me following information provided for each project.

The company uses a discount rate of 9% to evaluate both projects Based on the net present value, the company should invest in

project A only

project B only

project A and project B

neither project

NO.76 Alliantz Company, a USA-based manufacturer needs to set up a hedge to protect against dollar exchange rate devaluation. The protection is necessary (or an open balance of $2 478.450 Payment is to be settled in a rare currency 40 days from today excluding transaction fees which investment instrument would be used to provide the best hedge?

Stock options

Market-traded futures

Forward agreement

Currency warrant

NO.77 Southwest Supplies Inc. (SSI) is considering the following two projects with cash-flows discounted at SSI’s weighted average cost of capital.

SSI can only afford to invest in one of the projects. Which statement would most likely explain why SSI would choose Project B over project A?

Project B results in a higher cumulative accounting income

Project B generates significantly more non-cash expenses

Project B cash-flows are relatively more certain

Project B cash-flows are to be received sooner

NO.78 Explain the impact of a sales price adjustment on AMI’s operating income if AMI’ s operating leverage is higher than that of other companies in its market.
Essay
Food Depot Ltd, (FDL) is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants, FDL has been profitable in recent years and has a very strong cash position. FDL’s newest division. Food_TO-Go is an online meal ordering and delivery platform acquired by FDL two year ago.
In 20X7, sales for the entire company were $1 billion, with 50% of the business coming from the Airline Catering division. FDL is the country ‘s leading airline catering services provider and control 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-division only contribution 5% of FDL’s total sales in 20X7 and is far behind in competing for marketing for market share of the online meal ordering and delivery industry, it is estimated that Food-To-Go’s sales were only 20% of the industry leader’s sales. However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
Susan Willey, the head of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company. Wiley argues that ber division bad the highest ROI in 20X7, and it deserves more capital finding. FDL’s requested rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follow (in $ millions)

NO.79 Explain two potential benefits for Guda if it acquires Blue Moon.
Essay
Food Depot Ltd, (FDL) is a privately-held company that provides catering services to airlines and operates several restaurant chains including fast food, casual dining, and fine dining restaurants, FDL has been profitable in recent years and has a very strong cash position. FDL’s newest division. Food_TO-Go is an online meal ordering and delivery platform acquired by FDL two year ago.
In 20X7, sales for the entire company were $1 billion, with 50% of the business coming from the Airline Catering division. FDL is the country ‘s leading airline catering services provider and control 60% of the market share. However, the outlook of the airline catering industry is gloomy. The compound annual growth rate of the industry for the past five years was only 0.5% as airline networks have increasingly dropped catering on short domestic flights.
The Food-To-division only contribution 5% of FDL’s total sales in 20X7 and is far behind in competing for marketing for market share of the online meal ordering and delivery industry, it is estimated that Food-To-Go’s sales were only 20% of the industry leader’s sales. However, the outlook for the online meal ordering and delivery services industry is bright. The compound annual growth rate of the industry since it started three years ago was 50%. It is estimated the rapid growth of the industry will continue in the foreseeable future.
Susan Willey, the head of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company. Wiley argues that ber division bad the highest ROI in 20X7, and it deserves more capital finding. FDL’s requested rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follow (in $ millions)

NO.80 A manufacturing company is reviewing the budget for one of its component parts for next year based on the need for 5.000 units.

The company receives a bid from a supplier offering lo provide (lie needed component for a price of $115 per unit The company is deciding whether to make or buy the component What decision should the firm make if (1) the fixed facilities costs can be avoided or (2) if the fixed facilities costs cannot be avoided If purchasing from the supplier?

(1) Make; (2) Make

(1) Make; (2) Buy

(1) Buy; (2) Make

(1) Buy; (2) Buy

NO.81 Custom Ceramics produces two hand-painted items a large bowl and a large platter. Relevant information for each of these items is shown below

The company should produce only bowls because the contribution margin per bowl is higher.

The company should produce only platters because the variable cost per platter is lower

The company should produce only bowls because the sales price per Bowl is higher

The company should produce only platters because the contribution margin per painting hour is higher

NO.82 Employee performance review and development systems must be fully aligned with the requirements for ethical conduct Ethical expectations should be included in

competencies, only

job descriptions only

competencies and job descriptions only

compliances, job descriptions and objectives

NO.83 Discuss whether the demand for OLI’s new business English course is elastic and explain how OLI can use this information in determining the product price.
Essay
Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up a new sales office in a foreign country.
It needs a business license to operate in that country. The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of €300.
OLI estimates the new sales office can bring €300,000 incremental profit annually OLI has just launched a new online 40-houi course to help adult ESL learners master basic business English. The price of the new course is €500 per student, the variable cost is €300 per student, and the total fixed cost of the new course is
€300.000 per year OLI spent €200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI’s highly qualified staff and good reputation have enabled it to charge a premium price compared to its major competitors. Recent market research indicates that if OLI raises the price of its new business English course by 10V the student enrollment would decrease by 5V A regional airlines company in Asia has approached OLI and offered to enroll 1.000 of its employees in the new course if OLI would agree to a special price of €350 per employee If OLI accepts this offer, an additional €10,000 onetime cost would be required to temporally expand its capacity to accommodate the new students.

NO.84 Should OLI accept the proposal from the regional airline? Show your calculations Essay Online Learning Inc. lOLI) is a privately-held company based in the IUC that specializes in providing online courses in English as a Second Language (ESL). OLI is trying to set up a new sales office in a foreign country.
It needs a business license to operate in that country. The license normally lakes six months to obtain. An official of that country said that he could expedite the process for a fee of €300.
OLI estimates the new sales office can bring €300,000 incremental profit annually OLI has just launched a new online 40-houi course to help adult ESL learners master basic business English. The price of the new course is €500 per student, the variable cost is €300 per student, and the total fixed cost of the new course is
€300.000 per year OLI spent €200.000 to develop the new course before launching it. There are many online course providers in the marketplace, and each has its own feature However, OLI’s highly qualified staff and good reputation have enabled it to charge a premium price compared to its major competitors. Recent market research indicates that if OLI raises the price of its new business English course by 10V the student enrollment would decrease by 5V A regional airlines company in Asia has approached OLI and offered to enroll 1.000 of its employees in the new course if OLI would agree to a special price of €350 per employee If OLI accepts this offer, an additional €10,000 onetime cost would be required to temporally expand its capacity to accommodate the new students.

NO.85 A company currently offers all of its customers trade credit with terms of 1/15 net 45 of the following alternatives which would not Increase the company’s average collection period from its current level?

I only.

I and II only

III only

Ill and Iv only.

NO.86 A company plans to purchase equipment for $110 000. The equipment is expected to generate an annual cash flow o( $44 500 (of the next three years The company has a predetermined hurdle rate of 9% Using the internal rate of return (IRR). should the company purchase this equipment?

No, the IRR is less than the hurdle rate

No, the IRR is greater than the hurdle rate

Yes, the IRR is less than the hurdle rate

Yes, the IRR is greater than the hurdle rate

NO.87 Discuss whether QDD stock provided a return that was Better, worse, or the same as its investors would have expected using CAPM snow your calculations Essay Quality Digital Design (QDD) Inc is a public-traded technology company Selected financial data of QDD for the prior year are as follows

QDD’s stock was trading at $160 per share at the beginning of the yea: and at $176 per share by the end of the year. The company paid dividends of S5 per share. The company “s stock had a beta of 1 4 The stock market provided a total return of 12% last year, well above the 3% risk free rate of return QDD is considering the issuance of $200 million of bonds to fund the repurchase of $200 million of its stock.
QDD is evaluating the bond, including its term structure, maturity, and whether it should be callable obtaining the lowest coupon interest is an important objective of QDD. The CFO has estimated that sales for the current year would remain the same as last year and the new bond would add S12 million in annual interest payments