CIMA Exam CIMAPRA19-F03-1 Topic 7 Question 90 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 90
Topic #: 7

A company based inCountry D, whose currency is the D$, has an objective of maintaining an operating profit margin of at least 10% each year.

Relevant data:

* The companymakes sales to Country E whose currency is the E$. It also makes sales to Country F whose currency is the F$.

* All purchases are from Country G whose currency is the G$.

* The settlement of all transactions is in the currency of the customer or supplier.

Whichof the following changes wouldbe most likely to help the company achieve its objective?

AThe D$ strengthens against the E$ over time.

BThe F$ weakens against the D$ over time.

CThe D$ strengthens against the G$ over time.

DThe D$ weakens against the G$ over time.

Show Suggested Answer

Suggested Answer: A, B, E

by Misty at Jul 05, 2024, 06:04 AM

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Dona

2 months ago

I bet the finance team is having a field day with all these currency fluctuations. Gotta love those exchange rate calculations!

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Carey

1 months ago

A: Definitely, it would make their purchases cheaper.

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Jesusa

1 months ago

B: I agree, a stronger D$ against the G$ would increase their profit margin.

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Kendra

1 months ago

A: I think option C would help the company achieve its objective.

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Sherly

2 months ago

Hold up, guys. What if they just start buying in D$ instead of G$? That would solve everything! Why didn't they think of that?

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Annette

2 months ago

Hmm, I'm not sure. Wouldn't a weaker D$ against the G$ also help, since their purchases would be cheaper in D$? Tough call.

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Felix

2 months ago

I'm with you, Remona. A stronger D$ against the E$ is the perfect solution to meet that 10% target.

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Stevie

25 days ago

I think we should consider all options and analyze the potential impact of each currency change on our operating profit margin.

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Jennie

1 months ago

I see your point, but I still think a stronger D$ against the E$ is the best option for us.

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Nan

1 months ago

But what about the F$ weakening against the D$? Wouldn't that also be beneficial for us?

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Erasmo

1 months ago

I agree, that would be the most beneficial change for the company to achieve its objective.

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Truman

2 months ago

Yes, a stronger D$ against the E$ would definitely help increase our operating profit margin.

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Annabelle

2 months ago

I agree with you, a stronger D$ against the E$ would definitely help us reach our target.

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Remona

3 months ago

A is the way to go! If the D$ strengthens against the E$, their sales to Country E will be more valuable in D$, boosting the profit margin.

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Willodean

28 days ago

Hopefully it works out for them in the long run.

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Billy

1 months ago

I agree, it's a smart move to focus on strengthening the D$ against the E$.

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Detra

2 months ago

That makes sense, it would definitely help increase their profit margin.

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Aleshia

2 months ago

A) The D$ strengthens against the E$ over time.

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Shakira

3 months ago

Why do you think that? Can you explain your rationale?

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Eveline

3 months ago

I disagree, I believe option C would be more beneficial for the company.

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Shakira

3 months ago

I think option A would help the company achieve its objective.

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