IMA CMA-FINANCIAL-PLANNING-PERFORMANCE-AND-ANALYTICS Online Practice Questions and Exam Preparation

IMA CMA-FINANCIAL-PLANNING-PERFORMANCE-AND-ANALYTICS Online Questions & Answers

• Question 31:

  A company extracts data from existing data sets to identify customer patterns By doing this, the company is applying ______

  A. descriptive analysis
  B. diagnostic analysis
  C. predictive analysis
  D. prescriptive analysis
  A. descriptive analysis

• Question 32:

  Scully Tools Company is currently completing its master budget for the coming year Immediately before the master budget is approved, it is determined that December sales should be revised upward by S120.000 . Scully purchases merchandise on a just-in-time basis, and remits cash immediately through electronic transfer All sales are on account. 20% of the sales are collected in the month of sale, and 80% in the month following the sale. Scully's gross profit percentage is 30%. What effect will this budget revision have on Scully's pro forma statement of cash flows-

  A. Cash will decrease by $84,000
  B. Cash will decrease by $60,000
  C. Cash will increase by $24,000
  D. Cash will increase by $36,000
  A. Cash will decrease by $84,000

• Question 33:

  A fitness company produces workout video content and snares it online. The company has subscribers all over the world and its subscriber base has shown steady growth Management has approached a popular workout apparel company to discuss potential sponsorship opportunities. The goal is to impress the potential sponsor by showing the growth in total subscribers over the last 12 months. All of the following would be appropriate options for visualizing this data except a

  A. bar graph
  B. line graph
  C. pie chart
  D. table
  C. pie chart

• Question 34:

  A manufacturing company is setting a standard number of labor hours for a product Management creates a draft standard and asks for employees' feedback. Which one of the following statements best represents the type of standard that is being set-

  A. A participative standard because It includes management's Input to determine the standard.
  B. An authoritative standard because the employees helped to determine the standard
  C. A participative standard because the employees will more likely view the standard as reasonable.
  D. An authoritative standard because management still will ensure the standard fits the strategy
  C. A participative standard because the employees will more likely view the standard as reasonable.

• Question 35:

  After a recent earthquake in a nearby city the board of directors of a company has requested a review of the company s disaster recovery plan Which of the following would be classified as a weakness in the company's disaster recovery plan-

  A. Management has decided not to maintain a hot site because it was determined that the costs outweigh the benefits.
  B. The details of the disaster recovery plan stipulate that internal audit should review the plan every other year rather than annually.
  C. A cold site with backup data and documents is maintained on the basement level of the company s headquarters.
  D. Members of the company's disaster recovery team maintain current copies of the disaster recovery plan m their homes.
  C. A cold site with backup data and documents is maintained on the basement level of the company s headquarters.

• Question 36:

  Identify one external factor that provides opportunity for the Food-To-Go division.

  Essay

  Food Depot Ltd (FDD 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 m 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 years ago.

  In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 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-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, 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.

  The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting. Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division's budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.

  Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).

  

  A. See the Answer below in Explanation details.
  B. PlaceHolder
  C. PlaceHolder
  D. PlaceHolder
  A. See the Answer below in Explanation details.

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  Explanation

  External opportunity: the explosive growth of the online meal ordering and delivery market.

  The case says this industry has grown at about 50% CAGR since launch and is expected to keep expanding. That macro trend enlarges the total addressable market month by month and creates a rising tide that can lift late entrants. Demand-side forces-time-pressed consumers, willingness to pay for convenience, and widespread smartphone usage-are pulling more orders online. Supply-side enablers-mature mobile apps, digital payments, GPS routing, and a dense third-party courier network-lower the cost and friction of fulfillment. As volumes climb, platforms benefit from network effects (more restaurants --> more customers --> more couriers), falling unit delivery costs, and richer data for targeted promotions.

  For Food-To-Go, this external growth means faster customer acquisition at lower cost, room to scale into new neighborhoods without having to steal share aggressively, and a pipeline of value-positive projects that can clear the firm’s 12% hurdle. In short, the continuing, high-velocity expansion of the online delivery ecosystem is the key external factor that creates outsized upside for Food-To-Go.

• Question 37:

  The master budget for a company contains me following production requirements.

  Quarter 1-- 50,000 units Quarter 2 -- 55,000 units Quarter 3 -- 45,000 units Quarter 4 -- 52,000 units

  Each unit of product requires four pounds of direct material. The company has a policy to begin each quarter with an inventory of aired materials equal to 20% of that quarter's direct material requirements The budgeted direct mate da I purchases for the third quarter would be ______

  A. 36, 000 pounds
  B. 41,400 pounds
  C. 49, 400 pounds
  D. 185, 600 pounds
  D. 185, 600 pounds

• Question 38:

  A company's return on investment will increase it expenses decrease by $100 and _______

  A. net profit decreases by $100
  B. sales decrease by $100
  C. net profit remains unchanged
  D. total assets remain unchanged
  D. total assets remain unchanged

• Question 39:

  Discuss Whitney's arguments for allocating more capital funds to the Airline Catering division.

  Essay

  Food Depot Ltd (FDD 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 m 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 years ago.

  In 20X7. sales for the entire company were SI billion, with 50% of the business coming from the Airline Catering division. FDL is the country's leading airline catering services provider and controls 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-Go division only contributed 5% of FDL's total sales in 20X7 and is far behind in competing for market share of the online meal ordering and deliver, 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.

  The costs of shared corporate services are allocated based on each division s revenue FDL usually caps its capital expenditure budget to 4% of budgeted sales revenue In a recent capital budget coordination meeting. Smith Whitney, the head of the Airline Catering division. complained that his division is underfunded on capital projects . The budgeted capital expenditure had been much less than 4 % of the division's budgeted sales in the past three years He argued that his division is the company's best-performing division, and it needs more funds to maintain its market share m the industry Whitney wants to reduce the capital expenditure budget for Food-To-Go and reallocate those funds to his division.

  Susan Wiley, the bead of Food-To-Go, does not agree that the Airline Catering division is the best-performing division in the company Wiley argues that her division had the highest ROI in 20X7. and it deserves more capital funding FDL's required rate of return is 12%. The selected financial data for the Airline Catering division and Food-To-Go division in 20X7 are as follows (in $ millions).

  

  A. See the Answer below in Explanation details.
  B. PlaceHolder
  C. PlaceHolder
  D. PlaceHolder
  A. See the Answer below in Explanation details.

  ---

  Explanation

  Whitney’s case for diverting more capital to Airline Catering is weak. The division earns a 10% ROI (200 ÷ 2,000), below FDL’s 12% hurdle, so its residual income is negative at −$40 million; investing incremental funds in a business that fails to clear the required return would destroy value. The industry context also undermines his claim: airline catering is mature and almost stagnant (about 0.5% CAGR over the past five years) and airlines continue to reduce catering on short-haul flights, so the pipeline of positive-NPV projects is likely thin. Pointing to the division’s size, market share (60%), or the fact that its capex has been “less than 4% of sales” does not justify more capital-capex is not an entitlement; it must be earned by projects whose expected returns exceed the hurdle on a risk-adjusted basis. By contrast, Food-To-Go operates in a rapidly growing market, earns a 25% ROI (5 ÷ 20), and generates positive RI of $2.6 million, so shifting funds away from it would forgo value-creating growth. The only sound argument for Airline Catering is maintenance capital needed to meet contract standards and protect existing cash flows; beyond that, incremental capital should not be reallocated from Food-To-Go unless Airline Catering can present specific investments expected to exceed the 12% required return.

• Question 40:

  In developing a risk-based approach to internal control, a company is considering the risks posed to various accounts due to the complex calculations involved as well as industry factors that make measurement difficult. These risk factors are part of ______

  A. systems risk
  B. account level risk
  C. control risk
  D. inherent risk
  D. inherent risk