- CFA Exams
- CFA Level I Exam
- Topic 3. Corporate Issuers
- Learning Module 5. Capital Investments and Capital Allocation
- Subject 3. Capital Allocation Principles and Pitfalls
CFA Practice Question
The post-audit performed as part of the capital allocation process is least likely to ______
A. improve a firm's operations.
B. produce concrete ideas for future investments.
C. force management to revise the original forecast to match actual results.
Explanation: The purposes of the post-audit process are to monitor forecasts, improve operations, and generate concrete ideas for future investments. The original forecast is, in effect, a "sunk cost." The point is not to revise the original forecast after the fact, but to create a more accurate forecast over the new planning horizon.
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