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CIMAPRA19-F03-1 Exam - Topic 4 Question 11 Discussion

A listed company in the retail sector has accumulated excess cash.In recent years, it has experienced uncertainly with forecasting the required level of cash for capital expenditure due to unpredictable economic cycles.Its excess cash is on deposit earning negligible returns.The Board of Directors is considering the company's dividend policy, and the need to retain cash in the company.Which THREE of the followingare advantages of retaining excess cash in the company?
C) The company will be in a position to respond promptly to unexpected investment opportunities. and D) Liquidity problems are less likely to be experienced if there is a downturn in business. and E) The market may interpret the return of excess cash as a sign of weak growth prospects.
A) Retaining excess cash may make the company vulnerable to hostile takeover.
B) The excess cash is earning a negligible return.

CIMAPRA19-F03-1 Exam - Topic 4 Question 11 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 11
Topic #: 4
[All CIMAPRA19-F03-1 Questions]

A listed company in the retail sector has accumulated excess cash.

In recent years, it has experienced uncertainly with forecasting the required level of cash for capital expenditure due to unpredictable economic cycles.

Its excess cash is on deposit earning negligible returns.

The Board of Directors is considering the company's dividend policy, and the need to retain cash in the company.

Which THREE of the followingare advantages of retaining excess cash in the company?

Show Suggested Answer Hide Answer
Suggested Answer: C, D, E

by Salome at May 05, 2022, 05:53 AM

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Jess
10 months ago
I’m not sure about that, returning cash could signal weakness.
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Latanya
10 months ago
Negligible returns on cash are a real bummer.
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Noble
11 months ago
Wait, how does excess cash make you vulnerable to takeovers?
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Gail
11 months ago
Totally agree, liquidity is key during downturns.
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Jamal
11 months ago
Retaining cash helps with unexpected investments!
upvoted 0 times
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Lilli
11 months ago
I'm leaning towards IaaS, since the provider is responsible for the infrastructure and the company has more control over the platform and application.
upvoted 0 times
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Alaine
11 months ago
This seems straightforward enough. The zfs create command with the correct encryption and key source options should do the trick. I'll go with options C and D.
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