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Thank you zabi7 ….where can I find the proposed changes?
also I want some more issues….Thank you again!
Yes I have watched it but I will watch it once again ..let me see if something gets into my head..:(
Anyways thanks a lot for the endeavor John.I am extremely sorry for being such a Moron….but I still didn’t understand why a firm of accountant needs money to finance its receivables?aren’t they mostly made out of service charge?In my opinion ,for this sorts of organisations the only component of working capital which needs financing is Cash …Please try to explain for the last time…..
Thank you.
why doesn’t perfect capital market require Tax?,
why should all investors be risk averse and rational(what does ‘rational’ mean?)thank you.
Thank you for the prompt response John,
I think an example would make this clear to me…
Lets take an example of a hotel …..the receivables in this case would be the room charge that has been allowed to be paid later….here few of the expenses that incurs are utilities bill(water,phone,electricity etc) and bathroom materials etc which in my opinion is nominal compared to the amount they are charged for the room….most part of the room charge is made up of labour cost which is not the cash being tied up in the receivables for which interest have to be paid…is it that the payment for the staff is made at a current date and the receivables are collected at a later date so the interest cost of the money paid to the staff is regarded as the cost of the working capital?
fewer non-current assets then manufacturing companies which allow them to finance most of their working capital via long term capital definitely make sense.
Thank you.
John, but I think in service organisations they do not tie there money in the receivables as they haven’t provided any goods to the clients and their payable is also very low as compared to receivable because they only buy things which are of nominal value as compared to the fees charged for the service…..in other words the working capital (receivables+cash-payable-OD) for service organisation is not actually the money that is tied to run the business and hence don’t have to pay interest……Is it that the time value of money is regarded as the only cost of WC for service organisations?
Thank you.Hi John,
which dividend were we suppose to use in the dividend growth model ?
what was the growth rate and cost of capital?I think I did the exam well in overall.thanks a lot for your guidance.
wish you luck for the future.It’s a great relief to know that I am not a Moron:)
Thank you so much for the answer.
I am sorry for posting a vague question.
What I meant was, when could we use the CAPM (calculated using the adjusted equity beta) for appraising a project which is being financed without changing the gearing of the company?or is it that we always must use risk adjusted WACC for similar situations?
And what if the gearing is being changed? is this not included in F9?I am asking this because I came across a question in BPP revision kit that used APV when gearing was changed.
thank you for the detailed explanation earlier.
thank you Gromit.
so what I understood here is that
1)First,we understand the entity and its environment and list down the probable risk areas
2)then we conduct RAP and shortlist the risk areas(identify the significant risk areas)
3)Then we design the audit procedure and write down the overall audit strategy and immediately write down the audit plan and finish the planning phase.
4)then we evaluate the system and decide the direction of the audit(substantive strategy or control strategy)Sorry for being such a moron:)
and thank you so much for the detailed answer.
