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The CMA Part 2: Strategic Financial Management exam, offered by the Institute of Management Accountants (IMA), is one of two exams required to become a Certified Management Accountant (CMA). This exam is designed to test the candidate's knowledge and skills related to strategic financial management and decision-making. The exam covers a range of topics including financial statement analysis, risk management, investment decisions, and corporate finance.
NEW QUESTION # 19
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?
- A. It is the US dollar because the parent company is in the US
- B. It is the U S dollar because the subsidiary has an intercompany loan from the parent company
- C. It should be determined by the management of the U.S. Company
- D. It should be the U S dollar if the local currency is hyper inflated
Answer: D
NEW QUESTION # 20
Amy Curtin sells used cars of a reliable bona Curtin has no knowledge of me history or any or the specific cars She believes that the brand is reliable, and is considering whether it is acceptable to offer only this general Information rather than specific information regarding me cars when trying to complete each sale The company has always preferred to make the sale and worry about any warranty issues later and there are no legal disclosure requirements in their jurisdiction Curtin considers herself to be an ethical person but she does not want to lose out on any potential sales of vehicles that are most likely in good mechanical condition Which one of the following statements best represents what Curtin should consider related to the meaning of ethics?
- A. Ethics is about the integrity of the decision making process to resolve issues
- B. Ethics is driven by compliance with a set of regulations or laws
- C. Ethics is about decisions where the relevant policies are informal and not documented
- D. Ethics is about being consistent with the ethical tone set by the organization
Answer: A
NEW QUESTION # 21
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
- A. 8.2%
- B. 8.0%
- C. 9.6%
- D. 10.5%
Answer: C
NEW QUESTION # 22
Marlow Company s partial balance sheet indicated the following.
- A. 2.08
- B. 1.58
- C. 1.96
- D. 0.51
Answer: B
NEW QUESTION # 23
Which one of the following statements with respect to ethics is correct?
- A. Good ethics stems from formal education
- B. Every organization that follows the law is ethical
- C. Ethics and laws are not closely related
- D. One may act legally and still be acting unethically
Answer: D
NEW QUESTION # 24
A corporation shows the following on its financial statements (in millions).
The corporation has a financial leverage ratio of
- A. 0.06
- B. 3.60
- C. 2.00
- D. 0.50
Answer: D
NEW QUESTION # 25
A company manufactures two products Product X and Product Y, during a joint process Product Y canoe processed further to create Product Z Relevant data are shown below.
- A. Product Y should he processed further because an additional S5.000 profit can be achieved by processing further
- B. Product Y should be processed further because me selling once of Product Z Is higher than Product Y
- C. Product y should not be processed further because an additional S35 000 loss can be achieved by processing further
- D. Product Y should be processed further because an additional $45,000 prof* can be achieved by processing further
Answer: A
NEW QUESTION # 26
In an Enterprise Risk Management environment, which one of the following is the best example of risk sharing?
- A. Self-insuring against loss
- B. Reallocating capital among operating units
- C. Establishing operational limits
- D. Outsourcing business processes
Answer: D
NEW QUESTION # 27
LMN Ltd, a British firm, has a financial covenant with its bank mat interest coverage based on earnings before interest taxes, depreciation, and amortization (EBITDA), must be at least 2.5 for each quarter Shown below are summary financial data.
An expected decline m sales will result In net Income of £ 1.500.000 The other elements of EBITDA will be similar to the most recently completed Quarter Given the above information, what is the ratio for the latest completed quarter and do the forecasted results meet the required covenant?
- A. 2.69 and will not be compliant in the next quarter
- B. 1.31. and will not be compliant in the next quarter
- C. 2.59. and will be compliant in the next quarter
- D. 2.50. and will not be compliant in the next quartet
Answer: A
NEW QUESTION # 28
Accounts receivable turnover increases from 4.0 times to 6.0 times. It all sales are on account when one of the following must decrease?
- A. Accounts receivable
- B. Days sales in receivables
- C. Cash
- D. Sales
Answer: B
NEW QUESTION # 29
Identify and explain the type of acquisition that would occur if Guda 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)
Answer:
Explanation:
See the explanation for the answer.
Explanation
The type of acquisition will be of a conglomerate as both of them are working in different industries. Guda is working in media industry where as blue moon is in real estate industry)
NEW QUESTION # 30
Mow many student enrolments per year ate required for the new busmen English course to break, even at its current price? Snow 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.
Answer:
Explanation:
See the explanation for the answer.
Explanation
NEW QUESTION # 31
FreeRide inc is considering replacing its existing shuttle bus win a new one. The new bus can offer considerable savings in operating costs Information about the existing bus and the new bus is shown below.
- A. current salvage value of the existing bus
- B. accumulated depreciation of the existing bus
- C. annual operating cost of the new bus
- D. original cost of the new bus.
Answer: B
NEW QUESTION # 32
A market in which no organized physical exchange exists is referred as a(n)
- A. secondary market
- B. efficient market
- C. over-the-counter market
- D. primary market
Answer: C
NEW QUESTION # 33
Employee performance review and development systems must be fully aligned with the requirements for ethical conduct Ethical expectations should be included in
- A. competencies and job descriptions only
- B. competencies, only
- C. job descriptions only
- D. compliances, job descriptions and objectives
Answer: C
NEW QUESTION # 34
Plenary Inc specializes in overnight package delivery. Total packages delivered last year were 10 000.000. and this quantity is expected to remain unchanged in the coming year. Unit contribution margin is $4,50 and total fixed costs are S40.000,000. The firm's 300 delivery truck drivers are seeking a S10 000 raise in annual salary In addition to a current base salary of $45 000 per year, the drivers receive a commission of $0 50 per package delivered If the firm grants the $10,000 salary increase to each driver and seeks to maintain the same level of pre-tax operating profit what is the maximum amount of commission the firm can pay its drivers per package delivered?
- A. $0.20
- B. $0.35
- C. $0.30
- D. $0.0
Answer: A
NEW QUESTION # 35
With respect to the COSO Enterprise Risk Management Integrated Framework (2017), which one of the following statements is true regarding Governance & Culture and Performance?
- A. Performance is a principle and Governance & Culture is a component of the Integrated Framework
- B. They are both principles of the Integrated Framework
- C. Governance & Culture is a principle and Performance is a component of the Integrated Framework
- D. They are both components of the Integrated Framework
Answer: D
NEW QUESTION # 36
Clark inc, expects to incur the following selected costs an a new product being planned for introduction early next.
* Design an development costs of $100,000 that will be incurred this year.
* Marketing costs of $50,000 to be incurred %50 this year %50 year
* Manufacturing costs of $500,000 to be incurred next year.
* In addition to external market factors, the pricing decision should be based on cost. The product cost that should be used is
- A. $525, 000
- B. $500,000
- C. $550,000
- D. $650, 000
Answer: D
NEW QUESTION # 37
An accounting manage' is deciding which performance measurement tool would be most appropriate to compare firms within their company s industry given that the firms vary in size significantly. Which one of the following analysis methods would be the most appropriate?
- A. Sensitivity analysis
- B. Horizontal analysis
- C. Vertical analysis
- D. Cash flow analysis
Answer: C
NEW QUESTION # 38
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The CMA-Strategic-Financial-Management exam is a four-hour computer-based exam that consists of 100 multiple-choice questions and two essay questions. The exam is designed to test the candidate's understanding of financial management concepts and their ability to apply those concepts in real-world situations. The exam is divided into four sections, each of which is designed to test a specific area of financial management. These sections include financial statement analysis, corporate finance, decision analysis, and risk management. Candidates who pass the CMA-Strategic-Financial-Management exam demonstrate a high level of knowledge and expertise in financial management and are highly valued by employers in a wide range of industries.
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