US CMA Part 2 …Mocktest
Comprehensive…Difficult level.. moderate difficult
Section A...
## Investment Appraisal (NPV/IRR)
1. A project has cash flows where NPV at 8% is positive and at 10% is negative. The IRR is closest to?
a) 7% b) 9% c) 11% d) 12%
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2. Methods using discounted cash flows for capital investments include?
a) Payback only b) NPV and IRR c) Average rate of return d) All of the above
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3. All projects with positive NPV should be?
a) Rejected b) Selected c) Compared to IRR only d) Ignored
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## CVP & BEP Analysis
4. Ray Co. sells routers at $60/unit, variable cost $35/unit, fixed costs $150,000. BEP in units?
a) 5,000 b) 6,000 c) 7,000 d) 4,000
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5. Contribution margin ratio for Ray Co.?
a) 35% b) 41% c) 50% d) 58%
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6. BEP in revenue for Ray Co.?
a) $300,000 b) $360,000 c) $210,000 d) $600,000
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7. Company sells at $50/unit, budgeted 600,000 units, sales $30M, COS $20M (75% var), SG&A $7.5M (40% var). BEP units?
a) 475,000 b) 449,910 c) 500,000 d) 300,000
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## Marginal Analysis (Make/Buy, Special Orders)
8. Relevant costs for special order include?
a) All fixed costs b) Incremental variable costs c) Sunk costs d) Allocated overhead
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9. Make-or-buy decision focuses on?
a) Total costs b) Avoidable costs c) Historical costs d) Fixed costs only
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## Mergers & Business Combinations
10. Firm A ($4M value) + Firm B ($1M) merge to $7M. Synergy?
a) -$1M b) $1M c) -$2M d) $2M
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11. Bargain purchase in acquisition recognized as?
a) Negative goodwill b) Goodwill c) Gain in earnings d) Deferred gain
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12. Leveraged buyout uses?
a) Equity only b) Debt secured by assets c) Preferred stock d) Bonds only
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13. Equity carve-out is?
a) Full sale b) Spin-off c) IPO of subsidiary shares d) Liquidation
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## Working Capital & Inventory Management
14. Reducing inventory lowers?
a) Ordering costs only b) Financing costs and improves liquidity c) Sales d) Fixed costs
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15. EOQ considers?
a) Carrying and ordering costs b) Sales only c) Fixed costs d) Taxes
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16. Cash conversion cycle shortened by?
a) Higher inventory b) Lower DIO c) Longer payables d) Higher receivables
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## Cash Management & Receivables
17. Receivables factoring without recourse transfers?
a) Credit risk to factor b) All risk to seller c) No risk d) Ownership only
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18. Optimal cash management minimizes?
a) Opportunity costs b) Holding + transaction costs c) All costs d) Risk only
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## Ratios (Cash Flow, Turnover, Profitability, Liquidity)
19. Cash flow ratio = ?
a) OCF / Current liabilities b) Current assets / CL c) Inventory / Sales d) Debt / Equity
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20. Accounts receivable turnover = ?
a) Sales / Avg AR b) AR / Sales c) COGS / Inventory d) Assets / Sales
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21. Quick ratio excludes?
a) Cash b) Inventory c) Receivables d) Marketable securities
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22. DuPont analysis decomposes ROE into?
a) Profit margin x Asset turnover x Equity multiplier b) Only margins c) Leverage only d) Liquidity
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## Leverage (Operating, Financial)
23. Operating leverage measures?
a) Fixed operating costs impact b) Debt levels c) Equity ratio d) Taxes
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24. Financial leverage from?
a) Debt in capital structure b) Fixed costs c) Variable costs d) Inventory
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## Bond Valuation & Capital Structure
25. Bond coupon > market rate sells at?
a) Discount b) Par c) Premium d) Zero
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26. Optimal capital structure minimizes?
a) WACC b) Debt c) Equity d) Risk only
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27. Capital gearing refers to?
a) Debt/Equity mix b) Inventory c) Cash d) Sales
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## Ethics & IMA Guidelines
28. IMA principles include?
a) Honesty, fairness, objectivity, responsibility b) Accountability only c) Profit only d) Risk
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29. Ethical dilemma resolution: Follow IMA steps including?
a) Discuss with supervisor b) Resign immediately c) Ignore d) Report publicly first
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30. Violates objectivity if?
a) Personal interests influence judgment b) Equal treatment c) Honesty d) Competence
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## Relevant Costs & Risk
31. Relevant costs are?
a) Future, incremental b) Sunk c) Allocated d) Historical
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32. Fraud risk assessment part of?
a) Internal controls b) External audit only c) Taxes d) Sales
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33. Risk strategy includes?
a) Avoid, accept, mitigate, transfer b) Ignore c) Only insure d) Only diversify
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## Foreign Currency & Rates
34. Spot rate vs. forward rate: Forward hedges?
a) Future transactions b) Past c) Spot only d) Equity
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35. Foreign exchange risk managed by?
a) Forwards, options b) Spot only c) Ignore d) Debt
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36. WACC uses?
a) After-tax cost of debt b) Pre-tax only c) Equity only d) Preferred only
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37. CAPM: Required return = Rf + beta*(Rm-Rf)
a) True b) False c) Only equity d) Debt
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38. DuPont ROE = ?
a) PM x AT x EM b) Current ratio c) Debt ratio d) Quick
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SECTION B:
## CVP & BEP Analysis (1-10)
1. Contribution margin ratio is 0.4, fixed costs $280,000. BEP in dollars?
a) $700,000 b) $112,000 c) $1,120,000 d) $812,000
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2. BEP units 2,000, fixed costs $50,000. CM per unit?
a) $25 b) $4 c) $250 d) $0.04
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3. Fixed costs increase impacts BEP by?
a) Decreasing it b) Increasing units/revenue c) No change d) Halving it
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4. Variable cost ratio increase requires?
a) Lower selling price b) Higher to maintain CM c) Ignore d) Fixed adjustment
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5. Target profit formula?
a) Fixed / CM b) (Fixed + target) / CM c) Variable / sales d) Sales / fixed
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6. BEP = Fixed / (Sales price - VC/unit). True?
a) Yes b) No, uses total sales c) Only revenue d) Ignores fixed
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7. CM = Sales price - VC/unit. Used in?
a) BEP only b) CVP broadly c) Pricing d) Inventory
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8. Sales $60/unit, VC $35, fixed $150K. BEP units?
a) 6,000 b) 5,000 c) 7,000 d) 4,000
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9. CM ratio impact on BEP?
a) Inverse b) Direct c) None d) Squared
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10. Fixed cost rise by 20%, BEP?
a) Rises 20% b) Falls c) Unchanged d) Doubles
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## Marginal Analysis: Make or Buy, Further Process (11-18)
11. Product X: Split-off $60K, further $80K revenue, process cost $14K. Process further?
a) No b) Yes, +$6K c) Break even d) Lose
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12. Beracyl: 60K gal × $3 extra rev = $180K, process cost $115K. Process?
a) No b) Yes, +$65K c) Split-off d) Ignore
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13. Mononate further process loses $5K. Decision?
a) Process b) Sell split-off c) Both d) Neither
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14. Make-or-buy: Consider?
a) Avoidable costs b) All fixed c) Sunk d) Total historical
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15. Further processing: Balance?
a) Incremental rev vs. costs b) Fixed only c) Total costs d) Sales volume
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16. Special order relevant?
a) Incremental costs b) Full overhead c) Past costs d) All capacity
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17. Idle capacity rent in make-buy?
a) Ignore b) Opportunity cost c) Fixed d) Variable
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18. Sell or process further: Joint products at?
a) Split-off evaluate incremental b) Always process c) Ignore joint d) Total
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## Risk Types, Assessment, Heat Map (19-25)
19. Risk mapping visualizes?
a) Probability vs. magnitude b) Costs only c) Profits d) Time
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20. Business risk?
a) Lower profit/loss b) Natural disasters c) Debt decisions d) Fixed/variable
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21. Hazard risks?
a) Storms, floods b) Financial c) Strategic d) Operational
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22. Risk ranking after?
a) Identification b) Mitigation c) Transfer d) Ignore
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23. Residual risk?
a) After mitigation b) Inherent c) Expected d) Maximum
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24. Risk response: Avoid, retain, reduce?
a) Mitigate, transfer b) Only insure c) Accept all d) Exploit none
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25. Heat map is?
a) Qualitative risk tool b) Quantitative c) Financial only d) CVP
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## ROCE, ROI & Mixed (26-30)
26. ROI = ?
a) Operating income / Avg assets b) Net income / Equity c) EBIT / Capital d) Sales / Assets
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27. ROCE = ?
a) EBIT / Capital employed b) Similar ROI c) Net / Equity d) Cash flow
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28. Risk aversion prefers?
a) Certain over uncertain b) High risk high return c) No preference d) Ignore
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29. Expected loss: 40% $1M + 60% $300K?
a) $580K b) $1M c) $300K d) $700K
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30. ERM integrates?
a) Governance, strategy, performance b) Silos only c) Finance d) Operations alone
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