CMA Exam Prep
Introduction to Strategic Management Question 1.State with reasons which of the following statement is correctíincorrect:Strategy is a substitute for Sound, Alert, and Responsible management. (Nov 2008, 2 marks)Answer:Incorrect: Strategy is no substitute for sound, alert and responsible management. Strategy can never be perfect, flawless, and optimal. It is in the very nature of strategy that […]
Financing of Working Capital Question 1.Answer the following:Differentiate between Factoring and Bilis discounting. (Nov 2009, 2 marks), ( May 2015,4 marks) ORDistinguish between factoring and bill-discounting. (May 2013, 4 marks)ORWhat is ‘Bill discounting’? How does it differ from ‘Factoring’? Explain. (Nov 2017, 4 marks)Answer:Difference between Factoring and Bill Discounting Basis of Difference Factoring Bill Discounting […]
Management of Receivables and Payables Question 1.The credit manager of XYZ Ltd. is reappraising the company’s credit policy. The company sells its products on terms of net 30. Cost of goods sold is 85% of sales and fixed costs are further 5% of sales. XYZ classifies its customers on a scale of 1 to 4. […]
Management of Inventory Question 1.A Ltd. uses inventory turnover as one performance measure to evaluate its production manager. Currently, its inventory turnover (based on cost of goods sold ÷ inventory) is 10 times per annum, as compared with industry average of 4. Average sales are ₹ 4,50,000 p.a. variable costs of inventory have consistently remained […]
Financing Decisions Leverages Question 1.What do you understand by Business Risk and Financial Risk? (Nov 2009, 2 marks)Answer:Business RiskIt refers to the risk associated with the firm’s operations. It is uncertainty about the future operating income. That is, how well can the operating income be predicted? It can be measured by standard deviation of basic […]
Financing Decisions Capital Structure Question 1.Answer the following:What is Optimum Capital Structure? Explain. (Nov 2007, 2 marks)ORAnswer the following:Discuss the concept of ‘Optimál Capital Structure.” (Nov 2008, 2 marks)Answer:Capital structure is optimum when the value of the firm is maximum and Cost of capital (debts & equity) is minimum and so market price per share […]
Cost of Capital Question 1.Explain the significance of Cost of Capital. (Nov 2019, 4 marks)AnswerThe cost of capital is important to arrive at correct amount and helps the management or an investor to take an appropriate decision. The correct cost of capital helps in the following decision-making: 1. Evaluation of Investment options The estimated benefits […]
Financial Analysis and Planning Ratio Analysis Question 1.Answer the following:What is quick ratio? What does it signify? (Nov 2008, 2 marks)Answer:Quick ratio also termed as “acid test ratio” is one of the best measures of liquidity.It is worked out as follows:Quick Ratio = Quick Assets Quick liabilities In the above formula:Quick Assets = Current Assets – InventoriesQuick liabilities […]