CTP Financial Planning and Analysis 5

Question 1

A company is preparing its annual operating plan. Which starting point best ensures the budget is aligned with strategic objectives?

Accepted Answer

Strategic plan targets and key performance indicators

Answer

Anchoring the operating plan to strategic targets and KPIs ensures resource allocation directly supports the company's long-term goals.

Question 2

In treasury financial planning, what does 'cash flow at risk (CFaR)' measure?

Accepted Answer

The potential shortfall in cash flow below a target level due to risk factors at a given confidence level

Answer

CFaR quantifies the worst-case cash flow shortfall at a specified confidence level (e.g., 95%) caused by adverse movements in market risk factors.

Question 3

A company's days sales outstanding (DSO) increases from 35 to 50 days while revenue stays flat. What is the direct financial planning implication?

Accepted Answer

More working capital will be needed to fund the higher receivables balance

Answer

Higher DSO means cash is collected more slowly, increasing the accounts receivable balance and requiring more working capital financing.

Question 4

Which financial planning KPI measures the accuracy of a company's forecasting process?

Accepted Answer

Forecast accuracy rate (actual vs. forecast variance %)

Answer

Forecast accuracy rate tracks the average percentage deviation between forecasted and actual results, indicating the reliability of the planning process.

Question 5

When performing a DuPont analysis, which decomposition correctly breaks down return on equity (ROE)?

Accepted Answer

ROE = Net margin × Asset turnover × Equity multiplier

Answer

The three-factor DuPont formula decomposes ROE into profitability (net margin), efficiency (asset turnover), and leverage (equity multiplier).

Certified Treasury Professional Exam Practice Test

Certified Treasury Professional Exam Practice Test

CTP Financial Planning and Analysis 5