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Past papers › FM + SM › May 2025

CA Inter FM + SM — Revision Test Paper (RTP) — May 2025

This page contains all 27 questions from the CA Inter Financial Management & Strategic Management Revision Test Paper (RTP) for the May 2025 attempt cycle, sourced from VSI Jaipur.

QSM-1(i)Strategic management – core values and business philosophy
0 marks hard
Case: DezineFabs is a fast-growing clothing brand in India. It started with a clear goal: to make stylish clothes affordable for everyone while also being mindful of the environment. The company strongly believes in three values – inclusivity, sustainability, and innovation in fashion. DezineFabs was born with a clear vision: making stylish clothing accessible to every Indian, while minimizing their environmental impact through sustainability initiatives. In the beginning, DezineFabs emerged as a humble boutique offering affordable clothing. Recognizing shifts in customer behavior, DezineFabs evolv…
DezineFabs, an Indian clothing company, is deeply committed to a specific core value that underpins its business philosophy. This core value plays a pivotal role in guiding their actions and decisions. What is the central core value that defines DezineFabs' business philosophy?
(A) Exclusivity, where they prioritize offering unique and rare clothing items.
(B) Sustainability, reflecting their dedication to minimizing environmental impact.
(C) Profit maximization, focusing primarily on financial gains.
(D) International expansion, aiming to dominate global markets.
QSM-1(ii)Product life cycle – phase of product variant introduction
0 marks hard
Case: DezineFabs is a fast-growing clothing brand in India. It started with a clear goal: to make stylish clothes affordable for everyone while also being mindful of the environment. The company strongly believes in three values – inclusivity, sustainability, and innovation in fashion. DezineFabs was born with a clear vision: making stylish clothing accessible to every Indian, while minimizing their environmental impact through sustainability initiatives. In the beginning, DezineFabs emerged as a humble boutique offering affordable clothing. Recognizing shifts in customer behavior, DezineFabs evolv…
DezineFabs embarked on a strategic move to introduce specific product variants at a particular phase of the product life cycle. In which phase did DezineFabs introduce gluten-free and organic variants of their products?
(A) Introduction phase, targeting early market entrants.
(B) Growth phase, capitalizing on expanding market demand.
(C) Maturity phase, aiming to maintain market share.
(D) Decline phase, attempting to revive fading product sales.
QSM-1(iii)Strategic responsiveness – adapting to changing customer pre
0 marks hard
Case: DezineFabs is a fast-growing clothing brand in India. It started with a clear goal: to make stylish clothes affordable for everyone while also being mindful of the environment. The company strongly believes in three values – inclusivity, sustainability, and innovation in fashion. DezineFabs was born with a clear vision: making stylish clothing accessible to every Indian, while minimizing their environmental impact through sustainability initiatives. In the beginning, DezineFabs emerged as a humble boutique offering affordable clothing. Recognizing shifts in customer behavior, DezineFabs evolv…
DezineFabs showcased agility in adapting to evolving customer preferences. How did they respond to changing customer behavior, as highlighted in the given case?
(A) By increasing the prices of their products to enhance exclusivity.
(B) By introducing a sustainable clothing line in response to a growing demand for eco-friendly fashion.
(C) By ignoring customer feedback and focusing solely on their original product range.
(D) By reducing the variety of their products to simplify their offerings.
QSM-1(iv)Stakeholder management – Mendelow's Matrix high power/high i
0 marks hard
Case: DezineFabs is a fast-growing clothing brand in India. It started with a clear goal: to make stylish clothes affordable for everyone while also being mindful of the environment. The company strongly believes in three values – inclusivity, sustainability, and innovation in fashion. DezineFabs was born with a clear vision: making stylish clothing accessible to every Indian, while minimizing their environmental impact through sustainability initiatives. In the beginning, DezineFabs emerged as a humble boutique offering affordable clothing. Recognizing shifts in customer behavior, DezineFabs evolv…
In accordance with Mendelow's Matrix, some stakeholder groups possess high power and high interest in a company's operations. Among the options listed below, which stakeholder group typically falls into the category of high power and high interest?
(A) Local communities with a vested interest in the company's impact on their neighborhoods.
(B) Fashion influencers, who can significantly affect brand perception and consumer choices.
(C) Loyal customers who consistently purchase the company's products.
(D) Low-power suppliers providing non-critical materials.
QSM-1(v)Core competence – trend forecasting in fashion
0 marks hard
Case: DezineFabs is a fast-growing clothing brand in India. It started with a clear goal: to make stylish clothes affordable for everyone while also being mindful of the environment. The company strongly believes in three values – inclusivity, sustainability, and innovation in fashion. DezineFabs was born with a clear vision: making stylish clothing accessible to every Indian, while minimizing their environmental impact through sustainability initiatives. In the beginning, DezineFabs emerged as a humble boutique offering affordable clothing. Recognizing shifts in customer behavior, DezineFabs evolv…
The case highlights one of DezineFabs' core competences, which contributes significantly to their success in the clothing industry. What specific core competence is emphasized in the given case?
(A) Expertise in automobile manufacturing, unrelated to their clothing business.
(B) Expertise in designing luxury watches, a separate industry altogether.
(C) Expertise in trend forecasting, which plays a critical role in the fashion industry.
(D) Expertise in aerospace engineering, unrelated to their clothing business.
QSM-10Business environment – definition and strategic interaction
0 marks easy
Yash is planning to launch his new tech start-up. He is exploring different locations across the country to establish his company in the right business environment. One option is the city of Bengaluru, the Silicon Valley of India, with an engaging network of entrepreneurs, investors, advisors and mentors. Coupled with various subsidies for new ventures and tax benefits, Bengaluru might be an ideal choice for Yash to establish his company and increase the chances of success. Define the term Business Environment with respect to the above scenario. Explain the different ways in which the interaction of a business with its environment can be helpful in developing a successful strategy.
QSM-11Porter's generic strategies – focused differentiation
0 marks easy
EliteWheels Ltd. is a luxury automobile manufacturer that caters to affluent customers seeking exclusivity and high-end features. The company offers premium vehicles with cutting-edge technology, showcased customization options, and top-tier customer service. Unlike mass-market car brands, EliteWheels Ltd. charges a significant premium for its automobiles, ensuring that only a niche segment of customers can afford them. Additionally, the company invests heavily in advanced engineering and innovation to maintain its superior quality and brand prestige. Identify and explain the strategy adopted by EliteWheels Ltd.
QSM-13Growth strategies – conglomerate (unrelated) diversification
0 marks easy
Jynklo Ltd. is an established online children gaming company in Japan. They are performing good in the gaming industry. The management of Jynklo Ltd. has decided to expand its business. They decided to start a premium sports drink named JynX for athletes. Identify and explain the growth strategy adopted by Jynklo Ltd.
QSM-14Portfolio analysis – ADL Matrix and competitive position
0 marks easy
Write a short note on the role of ADL Matrix in assessing the competitive position of a firm.
QSM-15Strategy implementation – strategic performance measures and
0 marks easy
EcoPure Ltd., a sustainable packaging manufacturer, faces challenges in goal alignment, resource allocation, and customer satisfaction. As a strategic consultant, analyze how strategic performance measures can address these issues. Propose a structured approach to implementation and explain how goal alignment, continuous improvement, and external accountability will drive long-term success and enhance stakeholder confidence.
QSM-16Strategic management – strategic planning vs operational pla
0 marks easy
Distinguish between Strategic Planning and Operational Planning.
QSM-2Organizational structure – Strategic Business Unit (SBU)
0 marks easy
Innovexa Solutions Ltd. operates in the technology sector and has four divisions: Innovate, Develop, Transform, and Elevate. Each division functions as an independent product center while also contributing to the company's flagship product, TechSphere. Every division has its own set of activities, managed by a respective division head, who is responsible for the product line's performance and profitability. While competing in different market segments, each division leverages its own unique resources and capabilities to maintain a competitive edge. This type of organizational structure is known as:
(A) Network structure
(B) Divisional structure
(C) Multi-divisional structure
(D) Strategic Business Unit (SBU)
QSM-3Strategic choices – strategic alliance for market expansion
0 marks easy
AeroGlide Inc., a global aviation company, approached Rajesh K, an Indian entrepreneur, to collaborate with his team on a next-generation aircraft manufacturing project. Their goal is to expand into South Asia, a region with a growing demand for advanced aviation technology. What strategy is AeroGlide Inc. trying to implement?
(A) Market Penetration
(B) Market Development
(C) Strategic Alliance
(D) Diversification
QSM-4Strategic analysis tools – Strategic Group Mapping
0 marks easy
A sportswear brand, Athleon, is introducing a new range of eco-friendly performance shoes for fitness enthusiasts. The strategic manager wants to analyze the market position of competing brands in the sustainable sports footwear segment. Which tool can be used for this analysis?
(A) SWOT Analysis
(B) Strategic Group Mapping
(C) BCG Matrix
(D) Value Chain Analysis
QSM-5Strategic management concepts – experience curve effect
0 marks easy
XYZ Logistics, a leading transportation company, has been operating in the industry for over a decade. Over the years, the company has expanded its fleet, optimized route planning, and implemented advanced fuel efficiency techniques. As a result, the company's per mile operating cost has significantly decreased due to improved efficiency and cumulative experience in managing large-scale logistics operations. Which strategic management concept best explains this reduction in operating costs?
(A) Experience curve
(B) Ansoff's growth matrix
(C) Strategic surveillance
(D) Value chain analysis
QSM-6Levels of strategy – corporate-level decision making
0 marks easy
Global Fast Foods Ltd., a multinational restaurant chain, is evaluating whether to enter the packaged food industry by launching its own brand of frozen meals. This decision involves analyzing new markets, potential acquisitions, and overall business portfolio diversification. At what level is this decision likely to be made?
(A) Business
(B) Corporate
(C) Functional
(D) Operational
QSM-7Limitations of strategic management – application to retail
0 marks easy
Ramesh Sharma has fifteen stores selling consumer durables in the Delhi Region. Four of these stores have been opened in the last three years. He believes in managing strategically and enjoyed significant sales of refrigerators, televisions, washing machines, air conditioners and like till four years back. With shift to the purchases to online stores, the sales of his stores came down to about seventy per cent in the last four years. Analyse the position of Ramesh Sharma in light of limitations of strategic management.
QSM-8Strategic intent – objectives, definition and characteristic
0 marks easy
Explain in brief the term 'objectives' as part of strategic intent. Also outline the characteristics the objectives of a company must possess to be meaningful and to serve the intended role.
QSM-9Porter's Five Forces – barriers to entry and threat of new e
0 marks easy
Easy Access is a marketing services company providing consultancy to a range of business clients. Easy Access and its rivals have managed to persuade the Government to require all marketing services companies to complete a time-consuming and bureaucratic registration process and to comply with an industry code of conduct. Do you think that by doing this Easy Access and its rivals has an advantage in some ways to fight off competitors? Explain.
Q4Financial analysis – balance sheet preparation from ratios
0 marks easy
Using the information given below, PREPARE the Balance Sheet of Nevy Private Limited as of 31.03.2025. Given ratios and details: - Stock Turnover Ratio: 15 times - Cash and Bank balance: 10% of Current Assets (net off prepaid expenses) - GP Ratio: 20% - Creditors Turnover Ratio (based on cost of goods sold): 10 times - Debtors Turnover Ratio: 12 times - Net Fixed Assets: 25% of Total Liabilities - Depreciation: 15% on Opening WDV - Current Ratio: 1.6 : 1 - Capital Gearing Ratio: 0.6 : 1 - All purchases and sales are on credit basis. Additional data given in the partial balance sheet: - Share Capital: Rs.36,00,000 - Current Liabilities (net of prepaid expenses of Rs.7,50,000): Rs.45,00,000 All working notes should form part of the answer.
Q5Cost of capital – WACC calculation using market value weight
0 marks easy
Paramhans Limited has a capital structure that consists of Equity share capital, Reserves & Surplus, Bank term loan, Debentures which are redeemable at a premium of 5% and Preference share capital redeemable at a premium of 5%. The coupon rate on debentures is 1.5 times of that of bank term loan coupon rate whereas the preference dividend rate is 1.5 times of debentures' interest rate. Tenure for the bank term loan, debentures and preference share capital is 3 years, 5 years and 7 years respectively. Current book value of the capital structure: - Equity Share Capital (FV = Rs.100): Rs.25,00,000 - Reserves And Surplus: Rs.10,00,000 - Bank Term Loan: Rs.10,00,000 - Debentures (FV = Rs.100): Rs.15,00,000 - Preference Share Capital (FV = Rs.100): Rs.20,00,000 - Total: Rs.80,00,000 Tax rate: 25%. Debentures are currently selling at Rs.96; Preference shares are currently selling at Rs.102. Equity shares are quoted at Rs.150 per share. P/E ratio for Paramhans Limited is 6.667 times. The overall capitalization and discounting rate of the company is 20%. CALCULATE the following:
Q6Capital structure – EPS comparison under alternative financi
0 marks easy
Namra Limited provides you with the following information: Operating Profit: Rs.6,20,000 Less: Interest on Debentures @ 10%: (Rs.80,000) EBT: Rs.5,40,000 Less: Tax @ 20%: (Rs.1,08,000) PAT: Rs.4,32,000 Less: 14% Preference Dividend: (Rs.1,12,000) Earnings for Equity Share Holders: Rs.3,20,000 No. of Equity Shares (Rs.10 each): 16,000 EPS: Rs.20 Reserves & Surplus: Rs.9,00,000. Namra Limited requires additional funds of Rs.15,00,000 for modernization and expansion. The current capitalization rate for equity is 20% and company has a policy to retain 40% of its earnings. The debentures and preference shares are trading at a premium of 10% and 25% respectively to their current book value. The fair value of equity shares is calculated by dividing the Overall Value of the firm by the number of equity shares. New equity shares for expansion will be issued at 15% discount to the current fair value price. ROCE (based on total value of firm) will increase by 10% to its current rate after expansion and modernization. If the capital gearing ratio goes above 2.50, interest rate on additional debt will increase by 200 basis points and preference dividend would increase by half a percentage. You are required to ADVISE on the below two financial plans to be selected based on earnings:
Q7Leverages – operating, financial, combined leverage; EPS and
0 marks easy
Details of Kshitij Limited for the year ended 31st March 2025: - Sales: Rs.180 lakhs - Fixed Cost (Excl. Interest): Rs.45 lakhs - B.E.P. Sales: Rs.120 lakhs - Equity Share Capital of Rs.100 each: Rs.150 lakhs - Income Tax Rate: 25% - Cost of Debt (Kd): 9% - Debt: Rs.90 lakhs Required to CALCULATE:
Q8Dividend decision – share valuation using Gordon's model and
0 marks easy
Mr. A had gathered the following information for his analysis: (A) A Company pays regular dividend on quarterly basis and the last interim dividend declared for the quarter was Rs.3 per share. (B) Company's turnover has seen an annual compounded growth of 25% (CAGR) in the last 5 years and is expected to grow at the same rate in the future. The company expects the following Rate of Return (ROI) against probabilities: - Scenario I: ROI 20%, Probability 0.30 - Scenario II: ROI 15%, Probability 0.60 - Scenario III: ROI 12%, Probability 0.50 (C) The retention ratio over the last 5 years has been 40%, 65%, 50%, 45%, 30% respectively and company plans to retain based on the past average. (D) The current interest rate on GOI Treasury bond is at 4.5%, the beta of the company is 1.3 and market return is 12.5%. You are required to CALCULATE the theoretical market price of the company's share for Mr. A's decision-making using Gordon's model and Walter's model.
Q9Working capital management – estimation of net working capit
0 marks easy
The management of Parshvam Limited is planning to expand its business at international level and consults you for preparing an estimation of working capital needs so that they can avail finance from the bank. The estimated data reveal the following: Materials Used: - Domestic on 2 months credit: Rs.9,00,000 - Imports on 3 months credit**: Rs.6,00,000 Lag in Payment of wages – 1 month: Rs.6,00,000 Lag in Payment of Manufacturing Overheads – 1/2 month: Rs.26,40,000 Sales: - Domestic on 1.5 months credit: Rs.30,00,000 - Export on 3 months credit (sale price 10% below domestic price): Rs.24,80,000 Administrative expenses payable in advance for 2 months: Rs.3,60,000 Lag in payment of Selling & Distribution expenses – 1 month: Rs.3,00,000 Advance Income tax of Rs.25,000 for the quarter falling in the next financial year is paid by the company. Manufacturing overheads is inclusive of depreciation on the new machine purchased for tailor-made export products. Purchase price for the new machine is Rs.24,00,000 with a depreciation rate of 10%. Cash Gross profit is at 20% on domestic sales. To promote exports, Export Promotion Council (EPC Board) provides a revenue subsidy of 2.5% for the new machine purchased. Parshvam Limited submits letter of credit (LOC) to its bank and avails all Export Sales value within 1 month. Financial institution charges a fee of 5% for the same. The company keeps one month stock of raw materials and finished goods each. Goods remain in process for half a month with 90% raw materials introduced in the process. Cash and bank balance to be maintained: Rs.1,50,000. Safety margin: 15%. **Raw materials imported will attract custom duty at 20% to be paid upfront with a duty drawback of 5% credited upfront. (Requisite assumptions and notes should form part of the solution.)