CMA Part 2 – Strategic Financial Management - Examination Sample Questions 4
1. Gordon has had the following nancial results for the last four years.
Year 1 Year 2 Year 3 Year 4
Sales $1,250,000 $1,300,000 $1,359,000 $1,400,000
Cost of goods sold 750,000 785,000 825,000 850,000
Gross prot 500,000 515,000 534,000 550,000
Ination factor 1.00 1.03 1.07 1.10
Gordon has analyzed these results using vertical common-size analysis to determine trends. The performance of
Gordon can best be characterized by which one of the following statements?
a. The common-size gross prot percentage has decreased as a result of an increasing common-size trend in
cost of goods sold.
b. The common-size trend in sales is increasing and is resulting in an increasing trend in the common-size
gross prot margin.
c. The common-size trend in cost of goods sold is decreasing which is resulting in an increasing trend in the
common-size gross prot margin.
d. The increased trend in the common-size gross prot percentage is the result of both the increasing trend in
sales and the decreasing trend in cost of goods sold.
2. The functional currency of an entity is dened as the currency
a. of the entity’s parent company.
b. of the primary country in which the entity is physically located.
c. in which the books of record are maintained for all entity operations.
d. of the primary economic environment in which the entity operates.
3. James Hemming, the chief nancial ofcer of a mid-western machine parts manufacturer, is considering splitting the company’s
stock, which is currently selling at $80.00 per share. The stock currently pays a $1.00 per share dividend. If the split is two-for-
one, Mr. Hemming may expect the post split price to be
a. exactly $40.00, regardless of dividend policy.
b. greater than $40.00, if the dividend is changed to $0.45 per new share.
c. greater than $40.00, if the dividend is changed to $0.55 per new share.
d. less than $40.00, regardless of dividend policy.
4. After a competitive bidding process, a company’s purchasing director awarded a contract to the lowest bidder, an organization
in which she had a personal interest. Since the winning bidder had the lowest price, she did not disclose her relationship with
the entity. In fact, she frequently highlighted the fact that the winning bidder had the most experience servicing contracts of this
nature. Which one of the values of ethical decision making did the purchasing director violate?
a. None, because a competitive bidding process was utilized.
b. Fairness, because she did not tell the truth about her relationship with the vendor.
c. Integrity, because her relationship with the bidder could have impaired her judgment.
d. Honesty, because she was not being truthful about the experience of the bidder.
CMA Part 2
Strategic Financial Management - Examination Sample Questions