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Q1 Draft a memo to management
a) The question required discussions on the three quadrants B, C, and D of Ansoff’s model and in relation to company ABC. The management (supported by shareholders) were supportive of quadrant A and question required discussion on this decision. Therefore the answer, I think required explaining the quadrants in relation to the strategic choice by ABC, using the SWOT analysis provided. My answer was focused on develop existing product with patented technology to exploit opportunities in current customer market.b) Agree with other comments, decision tree question was tough – but only because I had forgotten how to prepare it and was confused by the question requirements! They asked for a decision tree – so assumed only one, but I did not layout the diagram appropriately. I had instead written out the outcomes, but think my calculations were off anyways 🙁 . I read that the expected revenue by demand was on an annual basis, therefore multiplied by three for each sub-outcome, before adding together for possibly outcome after six years. I found that the cost of initial outlay (X: 6m and Y: 4m) exceeded highest probable return of either option in any final outcome (HH, HL, LH or LL), so I ended up choosing option Y as the least costly option (1.8m underfunding). This I think links to part c) funding strategy. I also made a few points regarding the appropriateness of using decision trees in making strategy, but think question wanted explanation of the weaknesses, so hopefully I can get some marks here for attempt.
c) Question required discussion of internal and external sources of funding for the facility upgrade, and assess CEO comments regarding possible strategy.
Internal – Retained Earnings (750K??), and cash from delaying payables to industry average (24 days to 30 days respectively) freed up about 130-140K. I forgot to include receivables management to squeeze out cash flow (49-50days currently, industry 30days so 19 days equates to roughly 572K available cash flow)
External – No experience of floating company, and considered expensive so no way to raise cash from external share issue. ABC’s gearing around 32-33% and industry average 55% – gives management the ability to obtain further lending. NCL was currently 800K, I estimated up to 1.25m could be further borrowed which would raise ABC’s gearing to roughly 55%.
Concluded that CEO assumptions were right, and internal and external funding could support project. The whole answer needed to form the body of the memo and so the prof marks should be available to those who linked the three parts together to form a coherent piece of work (I won’t probably get all of them though, lol).Q2 a) Discussion required regarding any general and IT issues, with a suggestion on how to overcome. Numerous to go through, but suffice to say more than enough to pick up most of the marks on offer, so long as suggestion(s) were logical and reasonable.
b) Discussion on corporate governance and ethical dilemmas, if SRO were to relocate (offices and/or functions??) to foreign country. The issues identified by the ethical and CG audit (internal or external??) needed linking in the answer, so suggestions on how issues made more problematic by relocating and/or outsourcing to the foreign country; data protection, suggestion of bribery and corruption, etc. There was something regarding outsourcing of IT function, so I included a point about Harmon’s model; that IT function was strategically important and the work was highly complex so need to undertake process improvement, not outsource. I was running low on time, so I only got 4 possible points down (2 for each), but sure there were 5-6 possible answers.
Q3 a) A discussion was required on the four stage evaluation and implementation of the COTS solution. Upon reading the narrative I thought the four stages were in the right order, and the question required us to explain why the head of the authority was disagreeing with the external consultant who advised them regarding the four stages. I explained the importance of the four stages stated (theory) and how WPHA needed to follow through with the first two stages and not jump to stage three (comparing COTS solution products) – linking to the issues identified in the scenario (payroll and HR process weaknesses).
b) Discussion on POPIT model and explaining WPHA business change project. The examiner was generous in this question, by stating the components of the model: people, organisation, processes and IT. This meant that you had to explain at least 1-2 points on each factor of the model and apply to scenario in the context of the business change project. Examples were; that the IT team was severely under-resourced, bad communication between head of authority and external consultant and the HR manager. I only got through 4 points due to time constraints, but hopefully I will get half (or more) of the points for this part question.
Avoided Q4 because I had forgotten all the elements of Porter’s national diamond model and wasn’t keen on taking the risk on the part (a) being 15-16mks (I think).
Well, sorry for the lengthy debrief, thought I’d get all this down now in anticipation of the results release in 5 weeks’ time. Hopefully we all achieve a pass – good luck to you all 🙂Looks like they may take this approach with future sittings – they have labelled other Dec 2015 question papers on their website with ‘September/December’ wording.
Will be interesting to see how they release the March 2016 papers – mix of the March 2016 questions with the missing Dec and Sep 2015 questions?
Also, will be good to know if they will release the papers in full to the providers, BPP, Kaplan, etc. for their exam kits?
Here is the link to the ACCA website – for UK version of the paper:
https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p2/past-exam-papers/uk.htmlAlthough, looks like Question 2 is from the INT paper.
The f9 question paper : https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f9/exampapers/F9-2015-jun-q.pdf
Sir Moffat’s Answers : https://opentuition.com/?wpdmact=process&did=MTI0LmhvdGxpbms=
Looks like I will get 22 marks from section A, keeping my fingers crossed for at least 28/60 marks from section B.
@nitrous83 said:
29 for priceQuestion 5 NPV – what was your calculation to arrive at this figure?
@emo777 said:
So, to conclude with the hardest mcqs:1) all three choices were financial intermediaries
2) factoring improves efficiency of trade receivables management in a company
3 market segmentation explains kinks in yield curves
4) money deposits are short term loans between banks, and this option was wrong
5) beta of debt understates financial risk, this was also wrong
6) borrowers buy futures and sell them later, this option was wrong
7) share options always reward good performance, this option was also wring
8) expected net present values are used for projects with several outcomes ONCE, this was incorrect as we know that expected values fo occur during many times, not just onceQuestion 2 above – I believe I chose the option that said this was untrue. Factoring is the process of outsourcing the credit control department – not sure it will always result in the improving of efficiency, subject to the factoring arrangement = with/without recourse?
@nirjhardey said:
guys i think we r just wasting time talking about part b..part b questions was easy enough depending on ones preparation. and it doesnt really matter if we get a few things wrong..as we will still get most of the marks for methods and calculations..having said that i dont know what to expect from acca anymore. so lets talk about part a guys where i think most of us had serious problem as questions were not only tricky some of them were not even in the study text.i would really appreciate if any of u think u done quite alright in sec a then pls come forward and share the answer with us. thnk ulol, read back though the forum – everyone’s been discussing the MCQs in Section A. Some of us have also posted our answer choices too.
@jenny3549 said:
It’s not mixing up methods – we all did a cost/benefit approach – we just have different answers for the advance interest based on either using receivables balance or invoices raised.I definitely got the calc’s wrong by the looks of it. I calculated the factoring cost on the receivables *80% – but at 7%, not 2%. Didn’t think about the 5% finance cost to net against the advance from the factoring company.
Although I concluded that the factoring was not worthwhile , hopefully I get some method marks for the other calculations 🙂@emo777 said:
Ok, what about money deposits, kinks, beta of debt and net present value of project ONCE? Was it true?Money deposits – not a loan between bank
Kinks – yes it was the right option, though can’t remember what else was in that question
Beta of debt – not sure about this one
NPV, once only – I can’t remember the exact wording, but for some reason I thought it was true??@emo777 said:
So, you agree on reward scheme? Also, i think your mistake was when you forgot to multiple advance by 35/360 and then only multiply by 80 percent and by 2 percentProbably got this wrong by the looks of it. Suggested factoring was too costly. But why multiply the credit sales by 35/360 in the cost of the advance?
