CMA Part 2 CMA Strategic Financial Management Exam Dumps Updated

1. A corporation has $80 million in current assets comprised of $30 million in inventory and $50 million in cash and marketable securities it has current liabilities of $50 million. If the corporation purchases an additional $10 million in inventory with trade credit this would

2. 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

3. The best discount rate to the use for evaluate of investment opportunities is the

4. Genco Healthcare has asked ns controller to summarize the company’s financial performance for the past two years. The accountant provided the following two years financial ratios for reference.

5. 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

6. A furniture retail company uses the LIFO inventory method Due to the nigh inflation rate in me past year, the company's

7. An organization s sol of values and code or ethics is an important consideration in human resource decisions for each of the following reasons except

8. Below is the income statement and balance sheet for a retail corporation.





What is the corporation's debt to total capital in year 2?

9. 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?

10. An accountant for a company has not used readily available professional development opportunities to stay aware of changes in tax laws and applied previous tax rules to the most recent tax return, resulting in an overpayment of income tax Using IMA's Statement of Ethical Professional Practice, how would the accountant's behavior best be described?

11. On January 1, 2008 the exchange rate between the U S dollar (S) and Indian Rupee (Rs) was $t = Rs 39. 2676. On January 1, 2009 the rate was Rs 1 = $0,0205.

Based only on the relative currency appreciation or depreciation, which country's exports would likely have increased?

12. Which one of the following situations describes a secondary offering of stock by a company?

13. Given the financial information shown below, what amounts would be shown for sales revenue and for gross prom, respectively in a common size income statement?

14. 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?

15. Abex Employment Agency has requested an increase in the firm's line of credit, and the bank is reviewing Abex's sales and collections history Although the firm's sales have increased the bank is concerned about the credit quality of the firm's customers

Based on the following information calculate the average collection period for the firm Use a 365-day year in your calculations.

16. A company had an operating cycle of 110 days, a cash cycle of 40 days, and an accounts receivable period of so days. The company s inventory period and accounts payable period are

17. An accountant is employed in the financial reporting department of a publicly-traded company. The company s compensation plan includes a year-end bonus based on the entity's financial performance and stock option rewards based on individual performance Using iMAs Statement of Ethical Professional Practice, identify the ethical Issues, if any, that may Be presented by this company s compensation plan.

18. All of the following describe ethical leaders except

19. A corporation’s financial analyst has identified four potential protects that ate mutually exclusive. Each protect will produce a constant annual cash flow for years 1 through 4, and have an initial investment at time 0 shown below.

If the corporation has a weighted average cost of capital of 10%, which project should be selected?

20. The human resources manager of BankUS has noted mat me company s employee turnover has increased. He has also had his budget cut, and will have to reduce training for new associates. He has a meeting scheduled with the CFO lo go over risks that his department faces.

What should the human resources manager tell the CFO about risk?

21. Each of the following describes a limitation of financial statement analysis except

22. Harris Wholesale Grocery Company has gross sales per year of $7 million and grants credit terms to its customers of 2/5. net 15 As a result. 60% of customers pay on the discount date 20% pay on the net due date, and 20% pay on average 10 days after the due date Assuming that sales are uniform throughout the year and using a 360-day year In the calculation what is the approximate annual amount of discount that Hams customers are allowed to take?

23. 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?

24. 1.Javier makes hand-looted learner dog collars. The materials cost $10 per collar and the collars are sold for $50 each. Javier sells me collars at a local farmer's market mat charges S100 per month for space rental if Javier's income tax rate is 30%, how many collars must Javier sell each year to earn $1,000 net income?

25. Risk maps are used in companies' enterprise risk management system because risk maps

26. SSA inc. issues 4% bonds with a lace value of $500,000 when the market rate of interest is 3% for similar bonds. The bonds mature in 10 years, and pay interest every six months.

Which one of the following is closest to the amount of cash SSA will receive upon issued.

27. A company is considering a capital project that includes the purchase of a new machine costing $100,000. The machines estimated useful life is five years with no salvage value. The annual operating cash inflows from the project are shown below.

Given an effective income tax rate of 20% and using straight-line depreciation, what would be the projects net cash flow in Year 3?

28. 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

29. if a company increases the price of its product from $3010 $35, demand would decrease from 30, 000 units to 20.000 units.

What is the price elasticity of demand for the company using the midpoint formula?

30. Marsalls Products Inc. manufactures and sells two products CD-ROMs and DVD's. The latest forecast on me products and their costs tor the coming year is shown in the following table.

Note 1: Fixed manufacturing cost of Si.500 000 per year is allocated to products based on the number of machine hours required to produce the product at a rate of S3 per machine

hour

The Manufacturing Team leader just informed the CEO that a fire occurred at one of the manufacturing lines and that line would be unavailable for the next 12 months. The result is that mere will only be 400 000 machine Hours available The CEO requested the management team to revise the plan for the coming year based on the new constraint. The Marketing Team leader stated that in order to minimize customer complaints about the shortage, a minimum of 100,000 units of each product should be produced With the new information from the Manufacturing and Marketing teams what is the optimal product mix for the coming 12 months'' Assume Marsalls can sell allot its production.

31. A market in which no organized physical exchange exists is referred as a(n)

32. When evaluating a capital Budgeting proposal, an advantage of using the payback method is that Bits process

33. Which one of the following statements regarding working capital management is not correct?

34. A risk with a high frequency of occurrence but with a low impact, is best managed by which one of the following risk response strategies?

35. Studler’s Restaurant is considering a contract to supply the weal senior citizen center with 10,000 meals. Regular sales at regular prices would be unaffected. The food cost for each meal s S3 Additional costs incurred as a result of the contract would De variable overhead of S 50 and variable selling general and administrative costs of S SO per meal sold. The selling price per meal would be $5, A total of $20,000 in fixed costs would be allocated at $2 per meal. The fixed costs are part of an overall total of $500,000 in annual fixed costs incurred regardless of the contract.

What will be the effect on pretax income if Studiers takes the special order?

36. 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?

37. Employee performance review and development systems must be fully aligned with the requirements for ethical conduct Ethical expectations should be included in

38. Radal inc. currently has three product lines: stationery computer supplies, and printer cartridges.

Based on the following information, the company is considering whether to drop the printer cartridge line.

39. With respect to the COSO Enterprise Risk Management Integrated Framework (2017), which one of the following statements is true regarding Governance & Culture and Performance?

40. 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?