Most Recent CIMAPRA19-F03-1 Exam Dumps

Prepare for the CIMA F3 Financial Strategy exam with our extensive collection of questions and answers. These practice Q&A are updated according to the latest syllabus, providing you with the tools needed to review and test your knowledge.

QA4Exam focus on the latest syllabus and exam objectives, our practice Q&A are designed to help you identify key topics and solidify your understanding. By focusing on the core curriculum, These Questions & Answers helps you cover all the essential topics, ensuring you're well-prepared for every section of the exam. Each question comes with a detailed explanation, offering valuable insights and helping you to learn from your mistakes. Whether you're looking to assess your progress or dive deeper into complex topics, our updated Q&A will provide the support you need to confidently approach the CIMAPRA19-F03-1 exam and achieve success.

The questions for CIMAPRA19-F03-1 were last updated on Mar 29, 2025.

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Question No. 1

A company's Board of Directors is assessing the likely impact of financing future new projects using either equity or debt.

The directors are uncertain of the effects on key variables.

Which THREE of the following statements are true?

AThe choice between using either equity or debt will have no impact on the amount of corporate income tax payable.

BRetained earnings has no cost, and is therefore the cheapest form of equity finance.

CDebt finance is always preferable to equity finance.

DDebt finance will increase the cost of equity.

EEquity finance will reduce the overall financialrisk.

FEquity finance will increase pressure to pay a higher total future dividend.

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Correct Answer: D, E, F

Question No. 2

A company aims to increase profit beforeinterest and tax(PBIT) each year.

The company reports in A$ but has significant export sales priced in B$.

All other transactions are priced in A$.

In 20X1, the company reported:

In 20X2, the only changes expected are:

* An increase in export prices of 10%, but no change to units sold.

* A rise in the value of the B$ to A$/B$ 2.500 (that is, A$ 1 = B$ 2.5)

Is it likely that the company would still meet its objective to grow PBIT between 20X1 and 20X2?

AYes, PBIT would increase by A$ 48 million.

BNo, PBIT would fall by A$ 48 million.

CYes, PBIT would increase by A$ 150 million.

DNo, PBIT would fall by A$ 150 million.

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Correct Answer: B

Question No. 3

A company'sgearing (measured as debt/(debt + equity)) is currently 60% andit isinvestigating whether an optimal gearing structure exists within the industry.

It hasanalysed the capital structure of similar companies in the industry and it would appear that there is evidence supporting the traditional theory of capital structure.

Companies with the lowest WACC in the industry have gearing of around 45% to 50%.

Which of the following actions would result in the company achieving a more optimal capital structure?

AUndertaking a rights issue of equity to repay some of its debt.

BRefinancing to replace some of its short term debt with long term debt.

CIncreasing the level of dividend to return more cash to shareholders.

DUsing retained cash to undertake a buyback of some of its equity.

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Correct Answer: A

Question No. 4

Whichof the following statements about IFRS 7 Financial Instruments: Disclosures istrue?

AIFRS 7 onlyappliestoentitiesthataredesignatedasfinancialinstitutionsbyaregulatoryauthority.

BIFRS 7 requires disclosures to be given for eachseparate class of financial instruments.

CThe main requirement of IFRS 7 is for qualitative disclosures relating to financial instruments and market risks.

DIFRS 7 requires sensitivity analysis in relation to credit risk.

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Correct Answer: B

Question No. 5

Company A is planning to acquire Company B. Both companies are listed and are of similar size based on market capitalisation No approach has yet been made to Company B's shareholders as the directors of Company A are undecided about the most suitable method of financing the offer Two methods are under consideration a share exchange or a cash offer financed by debt.

Company A currently has a gearing ratio (debt to debt plus equity) of 30% based on market values. The average gearing ratio (debt to debt plus equity) for the industry is 50% Although no formal offer has been made there have been market rumours of the proposed bid. which is seen as favorable to Company

AAs a consequence. Company As share price has risen over the past few weeks while Company B's share price has fallen.
Which THREE of the following statements are most likely to be correct?

ABased on current share price movements, a share exchange would mean Company A has to issue fewer shares to acquire Company B than it would have done a few weeks ago

BCompany B's shareholders will be able to participate in the future growth of the combined business if it is a share exchange

CThe method of finance chosen will not affect the post-acquisition earning per share of the combined business

DCompany A's weighted average cost of capital will fall if financing is with debt

ECompany A's gearing will increase following a share exchange.

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Correct Answer: A, A, D

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