CAFM Most Important Questions for CS Executive June 2026

CS Executive June 2026 CAFM examination requires a focused preparation strategy that emphasises high-weightage and frequently tested topics. By practicing important questions, students can strengthen their conceptual understanding while improving their problem-solving speed and accuracy. 

Key areas such as Consolidation of Accounts, Cash Flow Statements, Redemption and Buyback of Shares, Capital Structure Decisions, Financial Ratios, and Capital Budgeting concepts often play a significant role in the examination. 

A thorough revision of these topics, combined with regular practice of numerical and theory-based questions, can help candidates build confidence and maximize their scoring potential in the CAFM paper.

CS Executive June 2026 CAFM Most Important Questions

Below are the CS Executive June 2026 CAFM Most Important Questions that students should prioritize during their preparation. 

Q1. What is the Control Ratio in Consolidation of Accounts?

Answer: The Control Ratio represents the percentage of shares held by the holding company in the subsidiary company.

Formula: Control Ratio = (Shares Held by Holding Company ÷ Total Shares of Subsidiary Company) × 100

It helps determine the holding company's share in profits, reserves, and net assets of the subsidiary.

Q2. What is the difference between Pre-Acquisition and Post-Acquisition Profits?

Answer:

• Pre-Acquisition Profits: Profits earned before the holding company acquires shares in the subsidiary. These are considered capital profits.

• Post-Acquisition Profits: Profits earned after acquisition. These are treated as revenue profits and are included in consolidated reserves.

Q3. How is Goodwill calculated in Consolidation?

Answer: Goodwill arises when the purchase consideration exceeds the holding company's share in the net assets acquired.

Formula: Goodwill = Cost of Investment − Holding Company's Share in Net Assets

If the result is negative, it is treated as a Capital Reserve.

Q4. What is Minority Interest?

Answer: Minority Interest represents the portion of a subsidiary company's net assets that belongs to shareholders other than the holding company.

Components:

• Share Capital

• Pre-acquisition Profits

• Post-acquisition Profits

belonging to minority shareholders.

Q5. What is the difference between the direct and Indirect Methods of the cash flow statement?

Answer: The Direct Method and Indirect Method are two approaches used to calculate cash flow from operating activities in a Cash Flow Statement.

Q6. What is Capital Redemption Reserve (CRR)?

Answer: Capital Redemption Reserve is a reserve created when redeemable preference shares are redeemed or shares are bought back out of distributable profits. It helps maintain the company's capital base and protects creditors' interests.

Q7. What is Financial Leverage?

Answer: Financial Leverage measures the effect of debt financing on shareholders' earnings.

Formula:
Financial Leverage = EBIT ÷ EBT

Higher leverage increases both potential returns and financial risk.

Q8. How is Earnings Per Share (EPS) calculated?

Answer:

Formula:

EPS = Earnings Available to Equity Shareholders ÷ Number of Equity Shares

A higher EPS generally indicates better profitability for equity shareholders.

Q9. What is the Indifference Point in Capital Structure?

Answer:
The Indifference Point is the EBIT level at which two alternative financing plans produce the same EPS.

It helps management choose the most suitable financing option.

Q10. What is Net Present Value (NPV)?

Answer:  Net Present Value is a capital budgeting technique that compares the present value of cash inflows with the present value of cash outflows.

Formula:

NPV = Present Value of Cash Inflows − Present Value of Cash Outflows

• Positive NPV → Project should be accepted.

• Negative NPV → Project should be rejected.

Q11. What is the PV Ratio?

Answer:

Formula:

PV Ratio = (Contribution ÷ Sales) × 100

or

PV Ratio = (Change in Profit ÷ Change in Sales) × 100

It measures the contribution earned from each rupee of sales.

Q12. How do you calculate Sales for Desired Profit?

Answer:

Formula:

Sales = (Fixed Cost + Desired Profit) ÷ PV Ratio

This helps determine the sales level required to achieve a target profit.

Q13. What are the sources of funds in a Fund Flow Statement?

Answer:
Common sources of funds include:

• Issue of Shares

• Issue of Debentures

• Long-term Borrowings

• Sale of Fixed Assets

• Funds from Operations

Q14. What are the applications of funds?

Answer:
Applications of funds include:

• Purchase of Fixed Assets

• Redemption of Debentures

• Repayment of Loans

• Payment of Dividends

• Buyback of Shares

Q15. What are the major responsibilities of a Finance Manager?

Answer:
The modern role of a Finance Manager can be remembered through PRIA:

• P – Price Determination

• R – Raising Funds

• I – Internal Funds Management

• A – Asset Management

These responsibilities help maximize shareholder wealth and maintain financial stability.