Practice Test Geeks(CMC) Chartered Management Consultant Practice Test
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Financial Analysis & Business Performance Flashcards

7 cards from real CMC 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 Analysis & Business Performance flashcards as text

  1. Which of the following best describes the difference between operating cash flow and free cash flow (FCF)?

    Answer: FCF subtracts capital expenditures from operating cash flow

    Free Cash Flow = Operating Cash Flow − Capital Expenditures, representing cash available after maintaining or expanding the asset base.

  2. A company's current ratio is 2.5 but its quick ratio is 0.8. What does this disparity most likely indicate?

    Answer: A large portion of current assets is tied up in inventory

    A high current ratio with a low quick ratio indicates significant inventory in current assets, since inventory is excluded from the quick ratio calculation.

  3. An analyst values a company using EV/EBITDA at 8x and calculates an enterprise value of $40M. If the company has $5M in net debt, what is the implied equity value?

    Answer: $35M

    Equity Value = Enterprise Value − Net Debt = $40M − $5M = $35M.

  4. In scenario analysis for a capital investment, the consultant should weight scenarios by probability to compute:

    Answer: The expected net present value (NPV) across scenarios

    Probability-weighted NPV across scenarios provides the expected value of an investment, accounting for uncertainty in outcomes.

  5. A firm's revenue grew 20% but EBIT grew only 5%. Which metric would best explain this underperformance?

    Answer: Operating leverage and cost structure analysis

    Analyzing operating leverage and cost structure reveals whether fixed or variable costs are growing faster than revenue, explaining the EBIT-to-revenue gap.

  6. A company has Days Payable Outstanding (DPO) of 60 days, DSO of 45 days, and Days Inventory Outstanding (DIO) of 30 days. What is its Cash Conversion Cycle (CCC)?

    Answer: 15 days

    CCC = DIO + DSO − DPO = 30 + 45 − 60 = 15 days, meaning the company cycles cash relatively quickly.

  7. When a CMC uses a balanced scorecard to assess business performance, which of the following perspectives is NOT one of the four standard dimensions?

    Answer: Competitive positioning perspective

    The four BSC perspectives are Financial, Customer, Internal Process, and Learning & Growth; competitive positioning is not a standard dimension.