Certified Financial Management Specialist Practice Exam

What does CFI stand for in financial management?

1. Cash Flow from Investing

2. Cash Flow Indicator

3. Current Financial Investment

4. Chief Financial Investments

The correct answer is: Cash Flow from Investing

CFI stands for Cash Flow from Investing. This term refers to the cash transactions that occur as a result of investments in assets or securities and includes purchases and sales of long-term assets, as well as investments in other businesses. Cash Flow from Investing is a critical component of the cash flow statement, which provides insights into how a company is utilizing its cash, especially in acquiring or selling physical assets or investments. The relevance of CFI lies in understanding the company's investment strategies and how these strategies affect its cash position. A positive CFI indicates that a company is selling more assets than it is purchasing, while a negative CFI could suggest that a company is investing heavily in its growth. Other choices such as Cash Flow Indicator, Current Financial Investment, or Chief Financial Investments do not represent widely recognized financial terminology. They may imply different concepts related to finance but do not accurately describe the term CFI as it is commonly understood in financial management.