Practice Test GeeksCFO - Certified Chief Financial Officer Practice Test
← All CFO Flashcard Decks

Strategic Planning & Analysis Flashcards

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

Read the first 7 Strategic Planning & Analysis flashcards as text

  1. A company's WACC is 9%, but a proposed project has risk similar to a pure-play peer whose asset beta implies a 12% required return. Which rate should be used to discount the project?

    Answer: 12%, the project-specific risk-adjusted rate

    Projects should be discounted at a rate that reflects their own systematic risk, not the firm average.

  2. Capital rationing exists and several positive-NPV projects compete for limited funds. Which ranking tool maximizes total value?

    Answer: Profitability index (PV of inflows ÷ initial investment)

    The profitability index ranks projects by value created per dollar invested, which maximizes NPV when capital is limited.

  3. Which situation best illustrates the planning fallacy that a CFO should guard against in strategic forecasts?

    Answer: Consistently underestimating project timelines and costs despite past overruns

    The planning fallacy is the bias to underestimate time and cost even when past experience shows overruns.

  4. A Monte Carlo simulation of a project shows a 30% probability of negative NPV. What is the main advantage of this output over a single base-case NPV?

    Answer: It quantifies the full distribution of outcomes and downside probability

    Monte Carlo produces a probability distribution of outcomes, showing how likely and how large the downside risk is.

  5. Ansoff's matrix classifies selling new products into new markets as which growth strategy?

    Answer: Diversification

    Diversification, meaning new products in new markets, is the riskiest quadrant of Ansoff's matrix.

  6. When building a strategic plan, which practice best aligns capital allocation with strategy?

    Answer: Allocating based on each unit's strategic priority and expected risk-adjusted returns

    Effective capital allocation directs resources to the opportunities with the best strategic fit and risk-adjusted value creation.

  7. Which KPI is a leading indicator rather than a lagging indicator for a subscription business?

    Answer: Sales pipeline coverage ratio

    Pipeline coverage signals future bookings and revenue, while profit and revenue figures report what already happened.

How this page was made: written with AI tools and published by Nathan Beja, founder of Practice Test Geeks, who is responsible for its content. We have not yet matched this exam's facts to an official source, so confirm fees, dates and rules with the exam body. Not reviewed by a subject-matter expert. Editorial policy