Practice Test Geeks(CFC) Certified Financial Controller Practice Test
← All CFC Flashcard Decks

Financial Management & Strategy Flashcards

7 cards from real CFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Management & Strategy flashcards as text

  1. A CFO is considering a share repurchase versus a cash dividend of equal size. Which statement about the tax treatment is most accurate in the US?

    Answer: Repurchases may be tax-advantaged for shareholders since gains are deferred until shares are sold

    Share repurchases allow shareholders to choose when to sell, deferring capital gains tax, whereas dividends create an immediate taxable event for all recipients.

  2. A company's cash conversion cycle (CCC) is 45 days. Management wants to reduce it. Which action would be most effective?

    Answer: Negotiating longer payment terms with suppliers

    CCC = DIO + DSO − DPO; extending Days Payable Outstanding (DPO) by getting longer supplier terms directly reduces the CCC.

  3. Which financial metric is most useful for comparing the operating performance of two companies with different capital structures?

    Answer: EBITDA margin

    EBITDA margin excludes interest (and thus leverage effects), allowing operating performance comparison across firms with differing debt levels.

  4. A breakeven analysis shows a company's fixed costs are $500,000, price per unit is $50, and variable cost per unit is $30. What is the breakeven quantity?

    Answer: 25,000 units

    Breakeven = Fixed Costs ÷ Contribution Margin per unit = $500,000 ÷ ($50 − $30) = $500,000 ÷ $20 = 25,000 units.

  5. When a controller applies sensitivity analysis to a valuation model, the output is best described as:

    Answer: The change in NPV resulting from varying one input at a time while holding others constant

    Sensitivity analysis isolates the effect of changing one variable (e.g., growth rate or discount rate) while keeping all other assumptions fixed.

  6. A firm is evaluating two mutually exclusive projects with different lives. The most rigorous method to compare them is:

    Answer: Equivalent Annual Annuity (EAA) method

    The EAA converts each project's NPV into an annual figure, making projects with different lifespans directly comparable on a per-year basis.

  7. A financial controller is asked to assess whether a proposed merger creates value. Which approach directly measures the incremental value of the deal?

    Answer: Calculating the present value of expected synergies minus the acquisition premium paid

    True M&A value creation = PV of synergies − premium paid; EPS accretion can be misleading if it results from financial engineering rather than real economic gain.