WorksheetsSTRATEGIC CORPORATE FINANCE II
Total questions: 40
Worksheet time: 20mins
Which of the following best defines Strategic Financial Decision-Making?
Routine short-term budgeting
Aligning financial goals with overall corporate strategy
Bookkeeping and accounting
Dividend declaration only
The interface of financial policy and strategic management focuses on:
Audit compliance
Linking capital allocation with corporate goals
Tax minimization
Reducing dividend payouts
The role of a CFO in strategic management primarily involves:
Supervising daily operations
Ensuring sustainable value creation
Handling recruitment
Managing sales teams
Financial strategy at different hierarchy levels helps in:
Reducing marketing costs
Linking operational and strategic goals
Managing employee morale
None of these
A company’s financial policy aims to:
Ensure liquidity only
Balance profitability, growth, and risk
Increase short-term cash
Reduce long-term investment
Sustainable growth means:
Growth achieved without external borrowing
Growth aligned with internal financial capacity
Growth achieved by increasing equity only
Growth through cost-cutting
Which of the following is NOT a financial goal?
Profit maximization
Shareholder wealth maximization
Market expansion
Risk reduction
Strategic financial decisions are guided by:
Accounting standards
Organizational mission and vision
Sales targets
Dividend payout ratio
Financial planning integrates with strategy by:
Matching funding with long-term objectives
Monitoring employee attendance
Setting HR budgets
Managing sales territories
CFO’s contribution to value creation involves:
Operational budgeting only
Strategic financing and capital allocation
Reducing production cost
Marketing efficiency
Capital structure refers to:
Ratio of fixed to current assets
Mix of debt and equity in financing
Type of assets owned
Dividend payout pattern
Financial flexibility allows a firm to:
Borrow funds easily under favorable conditions
Maintain rigid debt policy
Avoid expansion
Fix dividend rates
Value creation through financing decisions occurs when:
Cost of capital < Return on capital employed
None of these
Financial discipline ensures:
Uncontrolled borrowing
Adherence to financial policies and limits
High leverage always
Neglect of internal control
Determining the optimal level of debt depends on:
Cost of debt and equity
Size of workforce
Marketing expenditure
Accounting method
A firm achieves effective capital structure when:
Its overall cost of capital is minimized
Debt is completely avoided
Equity is maximized
All profits are retained
Financial strategy supports expansion by:
Assessing financing options for growth
Reducing R&D
Limiting liquidity
Minimizing market presence
Financial risk increases with:
Higher debt proportion
Higher equity proportion
Lower fixed costs
Higher variable costs
Collaboration financing may include:
Joint ventures and strategic alliances
Individual savings
Government grants only
CSR funding
The Modigliani-Miller theory relates to:
Dividend policy
Capital structure irrelevance
Asset pricing
Risk diversification
The Net Present Value (NPV) method evaluates:
Future profits
Present value of future cash inflows minus outflows
Cost of equity
Rate of inflation
The Internal Rate of Return (IRR) is:
Discount rate that makes NPV zero
Simple interest rate
Prime lending rate
Weighted average cost of capital
Modified Internal Rate of Return (MIRR) overcomes:
Multiple IRR problem
Negative NPV
Depreciation issues
Inflation
Terminal value represents:
Project scrap value
Future value of reinvested cash flows
Book value
None of these
Abandonment value is:
Value from terminating a project early
NPV of total cash flows
Tax-adjusted profit
Replacement cost
MACRS relates to:
Tax depreciation method in the US
Inflation accounting
Cost-volume-profit analysis
None
Inflation-adjusted cash flow helps in:
Reflecting real profitability
Ignoring tax effects
Calculating nominal profit
Simplifying accounting
Capital rationing refers to:
Limiting funds available for investment
Borrowing excess funds
Increasing project returns
Cutting employee costs
Cost-Benefit Analysis evaluates:
Financial and social feasibility of a project
Only financial returns
Operational efficiency
Tax policy
Comparing projects with unequal lives requires:
Equivalent Annual Annuity (EAA) approach
Simple NPV
Cash payback
None
Systematic risk arises due to:
Market-wide factors
Firm-specific events
Management errors
Operational inefficiencies
Unsystematic risk can be reduced by:
Diversification
Inflation control
Government policy
Tax reforms
Risk-adjusted discount rate increases when:
Project risk increases
Risk decreases
Market stabilizes
Return is guaranteed
Hillier Model measures:
NPV risk under uncertain cash flows
Cost of capital
Dividend payout
Accounting profits
Sensitivity Analysis examines:
Effect of change in one variable on project NPV
Impact of all variables simultaneously
Random probability
Past data only
Scenario Analysis considers:
Combined changes in key variables under different conditions
Only worst-case outcome
Constant risk assumption
None of these
Coefficient of Variation measures:
Risk per unit of return
Total profit
Capital employed
Equity risk
Monte Carlo Simulation is used for:
Randomized risk estimation using probability distributions
Simple averaging
Linear regression
None
Expected NPV approach combines:
Probabilities with NPV outcomes
Only average cash flows
Discount rate variation
Cost of equity
A project with higher standard deviation of returns indicates:
Higher risk
Lower risk
Equal risk
No relation
