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| Certification Vendor: | CIMA |
|---|---|
| Exam Name: | Financial Strategy |
| Exam Number: | F3 |
| Certificate Validity Period: | Indefinite (once qualification requirements are completed) |
| Exam Duration: | 90 minutes |
| Related Certifications: | CIMA Management Level CIMA Operational Level CGMA Designation |
| Available Languages: | English |
| Exam Format: | Computer-based Objective Test, Multiple Choice Questions |
| Passing Score: | 100/150 (≈50%) |
| Real Exam Qty: | 60 |
| Recommended Training: | CIMA Official Learning Kaplan CIMA Training |
| Exam Registration: | CIMA Official Exam Registration Pearson VUE CIMA Exams Booking |
| Sample Questions: | CIMA F3 Sample Questions |
| Exam Way: | Computer-based exam delivered via test centers or approved online proctoring platforms. |
| Pre Condition: | Completion of CIMA Management Level (E2, P2, F2) is required before attempting F3. |
| Official Syllabus URL: | https://www.aicpa-cima.com |
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CIMA CIMAPRA19-F03-1 (F3 Financial Strategy) Exam is a crucial component of the Chartered Institute of Management Accountants (CIMA) qualification. F3 Exam assesses candidates' ability to analyze and evaluate financial information, make strategic decisions, and manage financial risks. It is one of the four exams that comprise the CIMA Professional Qualification, which is recognized globally and highly respected by employers in the finance industry.
NEW QUESTION # 429
Company A is based in Country A where the functional currency is the A$. Currently all sales are to domestic customers in Country A. However, the company is planning to expand internationally by acquiring Company B, a distribution company in Country B, to enable it to sell goods worldwide The functional currency of Country B is the BS Company A will invoice its international customers in their local currency.
Wage increases in Country B are forecast to be modest, due to high unemployment levels, but overall inflation in Country B is forecast to be significantly higher than in Country A Which TWO of the following statements about the economic risk of the acquisition of Company B are true?
Answer: E
NEW QUESTION # 430
A company has in a 5% corporate bond in issue on which there are two loan covenants.
* Interest cover must not fall below 3 times
* Retained earnings for the year must not fall below $3.5 million
The Company has 200 million shares in issue.
The most recent dividend per share was $0.04.
The Company intends increasing dividends by 10% next year.
Financial projections for next year are as follows:
Advise the Board of Directors which of the following will be the status of compliance with the loan covenants next year?
Answer: A
Explanation:
Interest cover = PBIT / Interest = 20 / 5 = 4 times # 3 # covenant met.
Next year dividend per share = 0.04 × 1.10 = 0.044.
Total dividend = 0.044 × 200m = 8.8m.
Retained earnings = Earnings - Dividends = 12 - 8.8 = 3.2m < 3.5m # retained-earnings covenant breached only.
NEW QUESTION # 431
Company P is a large unlisted food-processing company.
Its current profit before interest and taxation is $4 million, which it expects to be maintainable in the future.
It has a $10 million long-term loan on which it pays interest of 10%.
Corporate tax is paid at the rate of 20%.
The following information on P/E multiples is available:
Which of the following is the best indication of the equity value of Company P?
Answer: D
Explanation:
PBIT = $4m
Interest on loan = 10% × $10m = $1m
Profit before tax = $3m
Tax at 20% # earnings after tax = $3m × 0.8 = $2.4m
Use the P/E multiple for the food-processing sector (10x), as this best reflects the business risk and industry.
Equity value = $2.4m × 10 = $24m
NEW QUESTION # 432
A company's gearing is well below its optimal level and therefore it is considering implementing a share re-purchase programme.
This programme will be funded from the proceeds of a planned new long-term bond issue.
Its financial projections show no change to next year's expected earnings.
As a result, the company plans to pay the same total dividend in future years.
If the share re-purchase is implemented, which THREE of the following measures are most likely to decrease?
Answer: A,B,E
NEW QUESTION # 433
A profitable company wishes to dispose of a loss-making division that generated negative free cashflow in the last financial year.
The division requires significant new investment to return it to profitability.
Which of the following valuation approaches is likely to be the most useful to the company when negotiating the sales price?
Answer: C
Explanation:
The division is:
Currently loss-making
Has generated negative free cash flow
Requires significant new investment to return to profitability
Under CIMA F3 valuation principles:
Dividend growth model (A) - not suitable: the division does not pay dividends and may not be a standalone listed entity.
P/E ratio on forecast earnings (D) - inappropriate where current earnings are negative and future earnings highly uncertain.
Discounted forecast free cash flow (C) is theoretically strong, but here forecasts are likely to be very uncertain because profitability depends on substantial new investment by the buyer.
In such cases, the asset-based valuation (B) is often most useful as a negotiation tool: it provides a defensible view of what the business is worth in terms of its underlying net assets and sets a floor for acceptable sale price.
So the most useful approach in negotiations is B. Asset basis.
NEW QUESTION # 434
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