CMA Practice Online

Question 1

The degree of financial leverage of CompanyB, totwo decimal places, is

A : 1.03

B : 1.05

C : 1.12

D : 1.25

Answer: B

Question 2

In general, it is more expensive for a company to finance with equity capital than with debt capital

because

A : Long-term bonds have a maturity date and must therefore be repaid in the future.

B : Investors are exposed to greater risk with equity capital.

C : The interest on debt is a legal obligation

D : Equity capital is in greater demand than debt capital

Answer: B

Question 3

Willis, Inc. has a desired rate of return of 15% and is considering the acquisition of a new machine

which costs $400,000 and has a useful life of 5 years. Willis projects that earnings and cash flow will

increase as follows:

What is the payback period of Willis’ investment?

A : 1.5 years.

B : 3.0 years.

C : 3.3 years.

D : 4.0 years.

Answer: B

Question 4

The average collection period for a firm measures the number of days

A : After a topical credit sale is made until the firm receives the payment.

B : Foray pica check to” clear” through the banking system.

C : Beyond the end of the credit period before atypical customer payment is received.

D : Before a typical account becomes delinquent.

Answer: A

Question 5

The statement of income for Dimmell Co. presented below represented the operating result for the

fiscal year just ended. Dimmell had sales of 1,800 tons of product during the current year. The

manufacturing capacity of Dimmell’s facilities is 3.000 tons of product.

The breakeven volume in tons of product for 2002 is ?

A : 400 tons

B : 1,100 tons

C : 900 tons

D : 550 tons

Answer: B

Name:	Certified Management Accountant
Exam Code:	CMA
Certification:	CMA
Vendor:	IMANET
Total Questions:	1336
Last Updated:	Apr 23, 2024

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