Prepare for the IMANET Certified Management Accountant exam with our extensive collection of questions and answers. These practice Q&A are updated according to the latest syllabus, providing you with the tools needed to review and test your knowledge.
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An annual payment in perpetuity of $1,000 per year beginning immediate is said to offer a 12% interest rate. What is its present value?
At 12%. the factor for the present value of an annuity approaches 8.33333. That assumes the first payment is one year away, Since the first payment is today, 1.00 must be added to the above (actor, resulting in 9.33333.Muttipting 933333 times $1,000 results in a present value of $9,333 33.
Which of the following is a favorable condition for a firm competing in a profitable, expanding industry?
A firm that has successfully differentiated its products through developing a desirable image, better services, cost leadership, the features of the product, or other means is in a favorable competitive position. Competitors find if difficult to acquire the firm's customers, for example, by price cutting. The reason is that the firm's products are perceived to have few substitutes, and brand loyalty is high. Furthermore, barriers to entry are favorable to the firm. These barriers beter competitors from entering the market. Existing firms can increase market share and emphasize cutting costs and increasing value.
Methods of accelerating cash collections include all of the following except
Various methods of accelerating cash collections include decentralized collection outposts (normally one in each Federal Reserve District), electronic funds transfers, centralized banking for all company branches to avoid having to maintain minimum balances in several locations, and lockbox systems. A compensating balance is a minimum average or absolute amount that must be maintained in a bank account. Hence, it is not a means of accelerating cash collections. This requirement means that less cash is available to the depositor.
Some managers express the opinion that their ''cash management problems are nothing more than inventory problems.'' They then proceed to use cash management models, such as the EOQ model, to determine the
Since cash and inventory are both nonearning assets, in principle they may be treated similarly. The alternative to holding cash, however, is to hold marketable securities that do earn interest or dividends. Thus, a cash management model would determine how much of a firm's liquidly should be held as cash and how much in the 1torm of marketable securities.
How much does each additional sales dollar contribute toward profit for a firm with $4 million break-even level of revenues and $1 .2 million in fixed costs including depreciation?
Solving for CM% results in CM% = 30%. Thus, 30% of every dollar, or $0.30, contributes towards profits.
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