Financial Performance Measurement Flashcards
7 cards from real CPFM 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 Performance Measurement flashcards as text
Which variance compares actual price paid for materials to the standard price?
Answer: Material price variance
The material price variance isolates the effect of paying more or less than standard per unit.
A company with a market-to-book ratio greater than 1.0 is generally viewed by the market as:
Answer: Creating value beyond its book equity
A market-to-book above 1.0 suggests investors expect returns exceeding book equity value.
Free cash flow is best described as operating cash flow minus:
Answer: Capital expenditures
Free cash flow equals operating cash flow less capital expenditures needed to sustain operations.
Which profitability measure is most useful for comparing operating efficiency between two firms with different tax jurisdictions?
Answer: Operating margin
Operating margin excludes taxes and financing, isolating core operating efficiency.
A favorable labor efficiency variance occurs when:
Answer: Actual hours used are less than standard hours
Using fewer labor hours than the standard allowed produces a favorable efficiency variance.
In segment performance reporting, controllable margin is used to evaluate:
Answer: A manager's performance
Controllable margin reflects only revenues and costs a segment manager can influence.
Which ratio would best reveal that a firm is relying heavily on debt financing?
Answer: Debt-to-equity ratio
The debt-to-equity ratio directly compares borrowed funds to shareholder equity.