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You will need to pass the F3 Financial Strategy (F3) exam to achieve the CIMA F3 certification. Due to extremely high competition, passing the CIMA F3 exam is not easy; however, possible. You can use ExamBoosts products to pass the F3 Exam on the first attempt. The CIMA practice exam gives you confidence and helps you understand the criteria of the testing authority and pass the F3 Financial Strategy (F3) exam on the first attempt.
CIMA F3 (Financial Strategy) certification exam is an important qualification for finance professionals who want to advance their careers. F3 exam covers a wide range of topics related to financial strategy and is recognized by employers all over the world as a mark of excellence in the field of finance. Candidates who pass the exam can expect to earn higher salaries and have better career prospects than those who do not hold the qualification.
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CIMA F3 exam covers a range of topics such as financial strategy formulation, management of working capital, investment appraisal techniques, and risk management. F3 exam is divided into two sections – objective test and case study. The objective test consists of 60 multiple-choice questions that test the candidate's knowledge of the core financial management concepts. The case study section comprises a scenario-based question that requires the candidates to apply their knowledge and skills to solve a real-world financial problem. Passing the CIMA F3 Exam is a significant milestone in the journey of becoming a CIMA qualified professional.
CIMA F3 is both for beginners and experienced individuals who want to pursue a career in financial management. F3 exam builds on the foundations of accounting and finance studies, but it requires a more strategic and managerial approach to financial decision-making. Therefore, it is essential to understand the key factors that make financial strategy a critical aspect of a business strategy.
NEW QUESTION # 385
A company's current profit before interest and taxation is $1.1 million and it is expected to remain constant for the foreseeable future.
The company has 4 million shares in issue on which the earnings yield is currently 10%. It also has a $2 million bond in issue with a fixed interest rate of 5%.
The corporate income tax rate is 20% and is expected to remain unchanged.
Which of the following is the best estimate of the current share price?
Answer: D
Explanation:
PBIT = $1.1m
Debt = $2m at 5% # interest = $0.1m
Profit before tax = 1.1 - 0.1 = $1.0m
Tax at 20% = 0.2m # Earnings after tax = $0.8m
Earnings yield = Earnings ÷ Market value of equity = 10%:
0.8=0.10×MV#MV=0.80.10=$8m0.8 = 0.10 \times \text{MV} \Rightarrow \text{MV} = \frac{0.8}{0.10} =
\$8\text{m}0.8=0.10×MV#MV=0.100.8=$8m
Shares in issue = 4m # share price:
Price=84=$2.00\text{Price} = \frac{8}{4} = \$2.00Price=48=$2.00
NEW QUESTION # 386
Company A plans to acquire Company B in a 1-for-1 share exchange.
Pre-acquisition information is as follows:
Post-acquisition information is as follows:
Annual earnings are expected to increase by $4 million.
The P/E multiple of the combined company is expected to be 12 times.
If the acquisition proceeds, what is the expected percentage increase in the post acquisition share price of Company A?
Answer: C
Explanation:
Pre-acquisition
Company A
Earnings = $50m
P/E = 12 # Market value = 50 × 12 = $600m
Shares = 100m # Share price = 600 / 100 = $6.00
Company B
Earnings = $16m
Combined current earnings = 50 + 16 = $66m.
Post-acquisition assumptions
Earnings increase by $4m # New total earnings
= 66 + 4 = $70m
Combined P/E = 12
# Total market value = 70 × 12 = $840m
Effect of the 1-for-1 share exchange
Company B has 40m shares, so Company A issues 40m new shares.
New total shares in Company A = 100m + 40m = 140m
Post-acquisition share price:
New price=Total valueTotal shares=840m140m=$6.00\text{New price} = \frac{\text{Total value}}{\text
{Total shares}} = \frac{840m}{140m} = \$6.00New price=Total sharesTotal value=140m840m=$6.00 This is the same as the original $6.00, so the percentage increase in Company A's share price is:
6.00#6.006.00=0%\frac{6.00 - 6.00}{6.00} = 0\%6.006.00#6.00=0%
So the expected increase in share price is 0%.
NEW QUESTION # 387
The directors of the following four entities have been discussing dividend policy:
Which of these four entities is most likely to have a residual dividend policy?
Answer: B
NEW QUESTION # 388
Which THREE of the following statements are disadvantages of the net asset basis of valuation?
Answer: A,C,E
NEW QUESTION # 389
A listed company plans to raise $350 million to finance a major expansion programme.
The cash flow projections for the programme are subject to considerable variability.
Brief details of the programme have been public knowledge for a few weeks.
The directors are considering two financing options, either a rights issue at a 20% discount to current share price or a long term bond.
The following data is relevant:
The company's share price has fallen by 5% over the past 3 months compared with a fall in the market of 3% over the same period.
The directors favour the bond option.
However, the Chief Accountant has provided arguments for a rights issue.
Which TWO of the following arguments in favour of a right issue are correct?
Answer: C,E
NEW QUESTION # 390
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