Latest Success Metrics For Actual F3 Exam 2024 Realistic Dumps
Updated F3 Dumps Questions For CIMA Exam
CIMA CIMAPRA19-F03-1 exam covers investment appraisal, which involves the evaluation of investment opportunities to determine their potential for generating returns. This section covers various techniques such as net present value, internal rate of return, and payback period. The third section covers risk management and corporate finance, which involves the management of financial risk and the identification of opportunities to maximize shareholder value.
CIMA F3 (Financial Strategy) Exam is a comprehensive exam that tests candidates on their understanding of financial management and strategy. F3 exam is part of the Chartered Institute of Management Accountants (CIMA) Professional Qualification and is designed to assess a candidate's ability to analyze, evaluate and apply financial information in a business context. The F3 Exam is a critical stage in the CIMA qualification, and passing it is an essential step towards becoming a Chartered Global Management Accountant (CGMA).
CIMA F3 certification exam is targeted at finance professionals who are looking to advance their careers in the field of financial management. This includes finance managers, financial analysts, investment managers, and other finance professionals who are responsible for making strategic financial decisions. F3 exam is designed to test the candidate's ability to apply financial management theories and concepts to real-world scenarios.
NEW QUESTION # 157
A financial services company reported the following results in its most recent accounting period:
The company has an objective to achieve 5% earnings growth each year. The directors are discussing how this objective might be achieved next year.
Revenues have been flat over the last couple of years as the company has faced difficult trading conditions.
Revenue is expected to stay constant in the coming year and so the directors are focussing efforts on reducing costs in an attempt to achieve earnings growth next year.
Interest costs will not change because the company's borrowings are subject to a fixed rate of interest.
What operating profit margin will the company have to achieve next year in order to just achieve its 5% earnings growth objective'?
- A. 55.8%
- B. 58.5%
- C. 60.0%
- D. 58.0%
Answer: D
NEW QUESTION # 158
Hospital X provides free healthcare to all members of the community, funded by the central Government.
Hospital Y provides healthcare which has to be paid for by the individual patients. It is a listed company, owned by a large number of shareholders.
In comparing the above two organisations and their objectives, which THREE of the following statements are correct?
- A. Only Y is likely to have a mixture of financial and non-financial objectives.
- B. The performance of X will be appraised primarily on the basis of value for money.
- C. X and Y will have the same primary non financial objective - provision of quality of health care.
- D. X and Y have the same primary financial objective - to maximise shareholder wealth.
- E. X is a not-for-profit organisation while Y is a for-profit organisation.
Answer: B,C,E
NEW QUESTION # 159
PYP is a listed courier company. It is looking to raise new finance to fit each of its delivery vans with new equipment to allow improved parcel tracking for customers The senior management team of PYP have decided on a 10-year secured bond to finance this investment- Which TWO of the following variables are most likely to decrease the yield to maturity of the bond?
- A. The senior management team decide to issue an unsecured bond rather than a secured bond
- B. Changing the term of the bond from 1 0 years to 5 years to match the expected life of the new equipment
- C. The announcement of a new contract for PYP that will increase operating profits by 5°/o over the next 5 years.
- D. The senior management team decide to issue a convertible bond rather than a conventional bond
Answer: B,D
NEW QUESTION # 160
In the context of the Integrated Reporting <IR=> Framework which THREE of the following statements are correct?
- A. Under integrated reporting 'natural capital' refers to the renewable and non-renewable resources and processes which provide goods or services that support the organisation in the conduct of its business.
- B. The primary purpose of an integrated report is to ensure that management take environmental issues into consideration when making decisions.
- C. The primary purpose of an integrated report is to explain to providers of financial capital how an entity creates value over time.
- D. An integrated report integrates economic, environmental and social reports and is issued alongside the annual financial statements.
- E. Sustainability reporting is an intrinsic component of an integrated report
Answer: A,C,E
NEW QUESTION # 161
AA is considering changing its capital structure. The following information is currently relevant to AA:
The gearing rating raising the new debt finance will be 50%.
Which THREE of the following statement about the impact of AA's change in capital structure are true under Modigliani and Miler's capital structure theory with tax.
- A. The WACC will decrease below 7.6%
- B. The cost of equity will decrease below 10%
- C. The cost of equity will increase above 10%
- D. The cost of debt remain unchanged at 4%
- E. The cost of debt will increase above 4%
- F. The WACC increase above 7.6
Answer: A,D,F
NEW QUESTION # 162
An unlisted company operates in a niche market, exploring the west coast of Africa for new oiI reservoirs.
The oil exploration program has been successful in recent years and t now has a substantial amount of oil reserves with a high level of certainty of being recoverable Under financial reporting regulations, oil still in the ground is not recognised as an asset unit is extracted.
The expense of the exploration program has used up all the company's available cash resources.
The company has denied to list or a stock market and raise finds through an initial public offering to finance its drilling program.
Which of the following valuation methods in the appropriate to use in calculating an initial listing price for this company?
- A. Market capitalisation.
- B. Discounted cash flow valuation
- C. Framings valuation using the ratio of a multinational oil exploration company
- D. Net asset valuation based on book values.
Answer: B
NEW QUESTION # 163
A company has a financial objective of maintaining a gearing ratio of between 30% and 40%, where gearing is defined as debt/equity at market values.
The company has been affected by a recent economic downturn leading to a shortage of liquidity and a fall in the share price during 20X1.
On 31 December 20X1 the company was funded by:
* Share capital of 4 million $1 shares trading at $4.0 per share.
* Debt of $7 million floating rate borrowings.
The directors plan to raise $2 million additional borrowings in order to improve liquidity.
They expect this to reassure investors about the company's liquidity position and result in a rise in the share price to $4.2 per share.
Is the planned increase in borrowings expected to help the company meet its gearing objective?
- A. No, gearing would increase but the gearing objective would be met both before and after the announcement.
- B. No, gearing would increase and the gearing objective would be exceeded both before and after the announcement.
- C. No, gearing would increase and the gearing objective would be met before the announcement but exceeded after the announcement.
- D. Yes, gearing would fall and the gearing objective would be exceeded before the announcement but met after the announcement.
Answer: B
NEW QUESTION # 164
For which THREE of the following risk categories does IFRS 7 require sensitivity analysis?
- A. Supply chain risk
- B. Currency risk
- C. Interest rate risk
- D. Liquidity risk
- E. Commodity risk
- F. Credit risk
Answer: B,C,E
NEW QUESTION # 165
Select whether the following statements are true or false with regard to Modigliani and Miller's dividend policy theory.
Answer:
Explanation:
NEW QUESTION # 166
Select the most appropriate divided for each of the following statements:
Answer:
Explanation:
NEW QUESTION # 167
TTT pic is a listed company. The following information is relevant:
TTT pic's board is considering issuing new 6% irredeemable debt to re-purchase equity. This is expected to change TTT pic's debt to equity mix to 40: 60 by market value. The corporate tax rate is 20%.
What will be TTT pic's WACC following this change in capital structure?
- A. 11.66%
- B. 13.43%
- C. 11.09%
- D. 12.67%
Answer: C
NEW QUESTION # 168
Hospital X provides free healthcare to all members of the community, funded by the central Government.
Hospital Y provides healthcare which has to be paid for by the individual patients. It is a listed company, owned by a large number of shareholders.
In comparing the above two organisations and their objectives, which THREE of the following statements are correct?
- A. The performance of X will be appraised primarily on the basis of value for money.
- B. Only Y is likely to have a mixture of financial and non-financial objectives.
- C. X is a not-for-profit organisation while Y is a for-profit organisation.
- D. X and Y will have the same primary non financial objective - provision of quality of health care.
- E. X and Y have the same primary financial objective - to maximise shareholder wealth.
Answer: D
NEW QUESTION # 169
Company M plans to bid for Company J.
Company M has 20 million shares in issue and a current share price of $10.00 before publicly announcing the planned takeover. Company J has 10 million shares in issue and a current share price of $4.00.
The directors of Company M are considering an all-share bid of 1 Company M shares for 2 Company J shares.
Synergies worth $20m are expected from the acquisition.
What is the likely change in wealth for Company M's shareholders (in total) if the bid is accepted?
Give your answer to the nearest $ million.
Answer:
Explanation:
$ ? million
8
NEW QUESTION # 170
Which THREE of the following statements about stock market listings are correct?
- A. The increased scrutiny that applies to listed companies makes them less attractive to investors.
- B. The reporting requirements for listed companies are more onerous than those for private companies
- C. When seeking a listing to raise capital companies typically must ensure they include any costs of underwriting shares they need to issue.when determining the number of
- D. Listed companies may be viewed more favorably by suppliers and consequently granted more generous payment terms than private companies
- E. A prerequisite to obtaining a listing is that a public company must reregister as a private company first.
Answer: B,C,D
NEW QUESTION # 171
Which of the following statements about the tax impact on debt finance is correct?
- A. Debt instruments issued with fixed and floating charges do not attract tax relief on interest paid.
- B. Interest on debt is deducted from pre-tax profits.
- C. Preference share dividends attract tax relief in the same way as debenture interest.
- D. Interest on debt is deducted from post-tax profits.
Answer: B
NEW QUESTION # 172
Company AAB is located in Country A with the A$ as its functional currency It plans to grow by acquisition and has identified Company BBA as a potential takeover candidate Company BBA is located in Country B with the BS as its functional currency.
The directors of Company AAB are concerned about foreign currency risk if the acquisition goes ahead
Which of the following will be most effective in reducing Company AAB's exposure to translation risk if the acquisition is successful1?
- A. Financing the acquisition with borrowings in BS's
- B. Setting up a mufti-currency bank account to net-off receipts and payments
- C. Financing the acquisition with equity in A$'s.
- D. Using forward contracts to fix the exchange rate between the AS and the B$
Answer: D
NEW QUESTION # 173
The Board of Directors of a small listed company engaged in exploration are currently considering the future dividend policy of the company. Exploration is considered a high-risk business and consequently the company has a low level of debt finance.
Forecasts indicate a period of profit fluctuation in the next few years as the company is planning to embark on a major capital investment project. Debt finance is unlikely to be available due to the project's high business risk.
Which THREE of the following are practical considerations when determining the company's dividend/retention policy?
- A. The dividend policies of mature listed multinational companies in the exploration industry.
- B. The legislation and regulation governing distributable profits.
- C. The fluctuating nature of the projected future profits.
- D. The general level of interest rates and the tax savings on interest costs relating to debt finance.
- E. The timing and size of the cash flow requirements for the new investment.
Answer: B,C,E
Explanation:
Discursive_F0
NEW QUESTION # 174
An unlisted company is attempting to value its equity using the dividend valuation model.
Relevant information is as follows:
* A dividend of $500,000 has just been paid.
* Dividend growth of 8% is expected for the foreseeable future.
* Earnings growth of 6% is expected for the foreseeable future.
* The cost of equity of a proxy listed company is 15%.
* The risk premium required due to the company being unlisted is 3%.
The calculation that has been performed is as follows:
Equity value = $540,000 / (0.18 - 0.08) = $5,400,000
What is the fault with the calculation that has been performed?
- A. The cost of equity used in the calculation should have been 15%; no adjustment was necessary.
- B. The cost of equity used in the calculation should have been 12% (15% subtract 3%).
- C. The dividend growth rate is unsuitable given that earning growth is lower than dividend growth.
- D. The dividend cashflow used should have been $500,000 rather than $540,000.
Answer: C
NEW QUESTION # 175
The directors of a unlisted manufacturing company have prepared a valuation of their company using the price-earning method.
Their calculation is:
Value if the company's equity = $6 million x 10 =$60 million where.
* $6 million is the company's reported profit before interested and tax in the most recent accounting period and
* 10 is the average price-earnings ratio for all listed companies
Which THREE of the following are weakness of this valuation?
- A. The equity result needs to be uplifted in recognition that this is an unlisted company.
- B. The price-earnings valuation method gives a value for the entire entity not Just a value of the equity.
- C. The price-earnings ratio should have been an average for companies in the same industry sector rather than alI listed companies
- D. Profit after tax should have been used in the calculation instead of profit before interest and tax.
- E. A forecast of sustainable profit should have been used instead of a historical figure
Answer: C,D,E
NEW QUESTION # 176
A manufacturing company based in Country R. where the currency is the R$, has an objective of maintaining an operating profit margin of at least 10% each year
Relevant data:
* The company makes sales to Country S whose currency is the SS It also makes sales to Country T whose currency is the T$ " All purchases are from Country U whose currency is the US.
* The settlement of an transactions is in the currency of the customer or supplier
Which of the following changes would be most likely to help the company achieve its objective?
- A. The T$ weakens against the R$ over time
- B. The R$ strengthens against the S$ over time.
- C. The R$ strengthens against the U$ over time.
- D. The R$ weakens against the U$ over time
Answer: C
NEW QUESTION # 177
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