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[QUOTE] was operating profit/(current assets + non current assets – current liabilities). RI was final profit – (non current assets + current assets – current liabilities)*0.08[/QUOTE]
Problem is that when you did this calculation for the other Depots, it didn’t add up to the ROIs or RIs listed in the question. There was defo some other twist to this question
Pecking Order Theory. I believe –
1) Retained earnings
2 Bank Loan
3) Stock Loans
4) EquityI was surprised by the presence of Bank Loans but decided that Bank Loans are shorter than Bonds and cheaper which will reduce the WACC.
Am I right?
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Yeah i had the same question and this is the exact order i put so hopefully its right! pretty sure equity is the lowest in terms of financing while retained earnings & loans were further up th chain due to their lower costs.
Feeling grateful i missed that sensitivity analysis 20-mark question some people had. sounds ridiculously tricky. For section C i got a mixture of working capital management (Cash Operating cycle/Miller Orr & Discussion on trade recievables & NPV/investment apprasial+capital rationing.
Yeah think I got 58 as well for that one. Seems like you had to assume everything went up by 20% in-line with sales.
shossack wrote:Did anyone get question on flexed budget and transfer prices on section C.
Yep I got both of those. Exam was ridiculously hard
@alessiari said:
– can auditor accept lease of building from client at market price?– who were the two officers that could take the job ( I choose Lorenzo, and Bill) ?
I think the office building can be leased since its at the same value that everyone else gets it for.
As for the officers I believe i went with Manisha & Lorenzo. Bill couldn’t take it since his wife was the FD or something (Familiarity threat)