CIMA F3 Exam With Confidence Using Practice Dumps

Exam Code:

Exam Name:

Financial Strategy

Certification:

CIMA Strategic

Vendor:

CIMA

Questions:

393

Last Updated:

Apr 14, 2026

Exam Status:

Stable

F3: CIMA Strategic Exam 2025 Study Guide Pdf and Test Engine

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Financial Strategy Questions and Answers

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Question 1

A company has a financial objective of maintaining a gearing ratio of between 30% and 40%, where gearing is defined as debt/equity at market values.

The company has been affected by a recent economic downturn leading to a shortage of liquidity and a fall in the share price during 20X1.

On 31 December 20X1 the company was funded by:

• Share capital of 4 million $1 shares trading at $4.0 per share.

• Debt of $7 million floating rate borrowings.

The directors plan to raise $2 million additional borrowings in order to improve liquidity.

They expect this to reassure investors about the company's liquidity position and result in a rise in the share price to $4.2 per share.

Is the planned increase in borrowings expected to help the company meet its gearing objective?

Options:

No, gearing would increase but the gearing objective would be met both before and after the announcement.

No, gearing would increase and the gearing objective would be exceeded both before and after the announcement.

No, gearing would increase and the gearing objective would be met before the announcement but exceeded after the announcement.

Yes, gearing would fall and the gearing objective would be exceeded before the announcement but met after the announcement.

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Question 2

At the last financial year end, 31 December 20X1, a company reported:

The corporate income tax rate is 30% and the bank borrowings are subject to an interest cover covenant of 4 times.

The results are presently comfortably within the interest cover covenant as they show interest cover of 8.3 times. The company plans to invest in a new product line which is not expected to affect profit in the first year but will require additional borrowings of $20 million at an annual interest rate of 10%.

What is the likely impact on the existing interest cover covenant?

Options:

Interest cover would reduce to 3 times and the covenant would be breached.

Interest cover would reduce to 3 times and the covenant would NOT be breached.

Interest cover would reduce to 5 times and the covenant would be breached.

Interest cover would reduce to 5 times and the covenant would NOT be breached.

Question 3

B, a European based modern art dealer, frequently imports and sells single high value items created in the United States. The price is fixed at the date of sale but the items are commissioned and made to order with a lead time of three to nine months depending on the individual specification

B holds payment for his customers from the point of purchase and passes funds when the items are shipped However, despite putting the money on short term deposit, there have been times when B's profits have been almost entirely eroded by adverse movements m interest rates Advise B by matching the appropriate instrument to B's requirements.