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APM*** ACCA P5 June 2018 Exam was.. Instant Poll and comments ***
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Edit: Double post, sorry! See below.
@jsmp said: I found the Value Chain question in Q1 iii difficult and Q1 ii hard as I just couldn't think of anything that wasn't there. What did you guys put for Q4?This was my issue as well. I did parts i and iv for the report but was so lost for what to put for ii and iii. I read the scenario many times hoping something would pop out lol, but nope. I chose Q2 and 3. Based on other replies it looks like I did some stuff right, but I'm still nervous. In the end I went back to Q1 after and jot down some jumbled stuff for parts ii and iii that I was not happy with at all. I suppose it could've been worse? I voted hard in the poll. The 2 papers I sat this week may be my last, P7 was good but this..blech. Will try to be as positive as possible and hope for that magic 50!
Q1
i) Evaluate the presentation of the report and the measures in use.
Or words to that effect.
I had a lot more to say about the presentation than the measures. It was a good report - informative but still concise, easy to read, well laid out etc.
I thought it was interesting that the measures went some way beyond measurement of performance against the mission. It was like a balanced scorecard report without the headings to distinguish between different perspectives.
I think I said the report was fit for its purpose. The mission itself was a bit lacking - become the biggest clothing retailer and deliver exceptional value to shareholders. It's brief. I felt the measures were adequate for measuring performance against it.
ii) Suggest and justify 3 more measures to address key performance issues, using the data in appendix 1
I suppose the key issues were that shareholders were disappointed with declining dividends and that market share was slipping (4th largest to 5th).
I didn't have measures to suggest in relation those concerns. I suggested they should be looking at measures of efficiency. I suggested 3 measures like revenue/ number of stores.
I think what i wrote was justified but I was starting to panic at this point. Probably missed a few easy marks.
iii) Advice about the use of value chain analysis in simplifying the supply chain
Or something like that. There wasn't a lot of information about what they wanted to do with the analysis. Uncertainty about what the question meant made me panic further.
I took the supply chain reference to mean an assessment of how well supplier processes integrate with Chiven's, and suggested some ways this might be improved.
iv) Discuss the development of big data and explain some risks and systems implications
Pretty fair question, and kind of them to put the three Vs in the scenario.
I gave a decent answer, explained what each term meant but should probably have related it back to the company a bit more, ie what use could they make of the information.
- Professional marks, up to 4.
I learnt this time round that you can get these by:
- writing report at the top
- providing to/ from/ date/ subject
- writing an introduction and heading it 'Introduction'
- using headings for each new section.
I did all those things so would like to think I got all 4 marks.
Q3.
a) Evaluate the likelihood of failure as suggested by the application of Argenti's A Score.
Or words to that effect.
This was straightforward. They gave us the overall score of 47 ie over 25 and therefore bad.
The defects and mistakes were obvious and I had a lot to say about them. Autocratic CEO, unusually high operating gearing, entering a new area of business without the necessary expertise, potential failure of a large project.
There was less to say about symptoms. Declining morale and staff leaving was all there was to go on really.
b) Suggest changes to performance management systems in order to address the defects and mistakes
I thought this was quite hard to answer. On reflection, much of what I wrote was about what they should do to rectify the situation, as opposed to how performance management systems would need to be adjusted.
I said they should pay close attention to cash flow, as businesses fail when they run out of cash.
I wrote something about project management, as it was lacking.
I wrote something about adjusting employee targets to make sure the housing project was completed to time and within budget.
It might have been easier if the scenario had said what the existing performance management systems are designed to measure.
c) Evaluate the usefulness of qualitative models in predicting corporate failure
I wrote some fairly generic stuff about the pros and cons of Argenti's model compared with Altman's Z score.
As an aside, do you think it's a coincidence that one is called the A score, and one is called the Z score?
Would like to ask whether if wrongly distribute of defect mistake and Symptoms will be given marks??
@sokty said: Q3. Corporate failiure A. Argenti A score It is qualitative measure. Score of 47 indicated at risk of failure. The model cover 3 areas: - Defect: + Management defect: - Autocratic CEO - Override control by bidding during FD I'll and everyone in leave + Accounting defect: No - Mistakes: + High operational gearing 50% + Over trading: over use staff, long hours work + Failure of 1 big project: being sued by client and will result in big financial loss. - Symptoms: + Decreasing ratio: not known, only high gearing + Frozen salary: no + Decreasing morales: yes, as staff work long hours and some leave. B. How to improve: - Change fixed salary to variable salary to avoid dismissal, so low gearing - Convince staff to staff and go through tough situations together. C. Problem of Argenti model: - not suitable for service provider like LP. * I don't have much time for Q3 at all. So this is what I could answer. Wish I pass!
Not sure whether wrongly allocated the defect mistakes and symptoms will be given marks??
@richardpenfound said: Q3. a) Evaluate the likelihood of failure as suggested by the application of Argenti's A Score. Or words to that effect. This was straightforward. They gave us the overall score of 47 ie over 25 and therefore bad. The defects and mistakes were obvious and I had a lot to say about them. Autocratic CEO, unusually high operating gearing, entering a new area of business without the necessary expertise, potential failure of a large project. There was less to say about symptoms. Declining morale and staff leaving was all there was to go on really. b) Suggest changes to performance management systems in order to address the defects and mistakes I thought this was quite hard to answer. On reflection, much of what I wrote was about what they should do to rectify the situation, as opposed to how performance management systems would need to be adjusted. I said they should pay close attention to cash flow, as businesses fail when they run out of cash. I wrote something about project management, as it was lacking. I wrote something about adjusting employee targets to make sure the housing project was completed to time and within budget. It might have been easier if the scenario had said what the existing performance management systems are designed to measure. c) Evaluate the usefulness of qualitative models in predicting corporate failure I wrote some fairly generic stuff about the pros and cons of Argenti's model compared with Altman's Z score. As an aside, do you think it's a coincidence that one is called the A score, and one is called the Z score?
8y ago#37Hiya,
Q1 i wrote about how the revenue for 2017 was not split by product line and hence chiven cannot assess the performance of each product line.
Costs and how there was no mention of these hence difficult to assess whether costs are increasing or decreasing
Market growth- how the company needs to assess their performance against the performance of the industry
Absolute profit figures for comparability
Non financial info that shows no link to financial like number of accidents- are they claims to this- what is the point of this info.
Part b) got totally lost there wrote on measures of profitability, costs and how the company can measure web sales as this is a future plan
D) big data to assess trends however the information system needs to be able to store this data, analyst tools (software needed) and analysts hired to convert the data to info. All these are costly. Also have to be careful that the reader does not have an overload of info.
Q2)a the measures should be different as some costs are uncontrollable and the div manager's performance should not be based on these like overhead costs.
The manager will make decisions based on self interest instead of for the division. E.g. greens rejected project
B) messed up with the calculation. Just did a simple np/cap employed
Roi does not take in to account economic conditions ( which would affect profit) blue was in a politically unstable economy.
It does not take in to account the 3 months that blue were shut for
Different accounting policies in both countries affecting capital employed
Short term thinking and not going for projects with high investment so the divisional managers 15% target is met.
C) RI is an absolute measure so can't help comparison *** not sure
3)define argenti and how a score over 25 is considered failure.
Defects- passive board, autocratic CEO, FD not available and no interim in his place
Management mistakes- operational gearing is high which mean fixed costs are high. The board's decision of reducing staff would have solved this but would staff agree to be seasonal?
Big project with no oversight of costs by a FD. - agreed to a fixed fee. Bid made when board was away.
Overtrading- overuse of resources, hours
Symptoms of failure- staff leaving, low morale, litigation(the financial effect is yet to be determined)
B) individual performance targets for employees to motivate them
C) argenti is based on companies in the manufacturing sector in the 1960's in the u.s.
Our company has
1) a different economy
2) is in a different industry
3) is based in an economy 50 years on
Therefore argenti is not appropriate and should be paired with a quantitative model..
Has anyone n down anything along the lines of the above??
This is my final paper and iv got all my fingers crossed.
8y ago#38I just realised that my part 3c refers to z score :(
^Was just about to say that sounds more like Altman's lol
I just realised that even though I know evaluate means weigh both the good and bad, the word usefulness in 3c made me think they only wanted benefits for some reason. Whoops..
Anyway, how was Q4? What is it about? I just look at the marks and notice only 2 questions there, so not dare to do since may not be able to break down requirements.
Can anyone give me some answers to that?
@sokty said: Anyway, how was Q4? What is it about? I just look at the marks and notice only 2 questions there, so not dare to do since may not be able to break down requirements. Can anyone give me some answers to that?Q4 was a question about evaluating the budget setting process at a manufacturing company. I wrote it’s correct to use incremental budget as external environment is not rapidly changing + criticise not planning more challenging targets and monitor external environment. Part b was about finishing analysis of material variance, wrote they need to break it down by purchase volume and price variance + planning and operational variance but wasn’t sure how to do this. Question also asked to give brief analysis of other variances like labour rate and efficiency and recommend improvement to avoid this. I had to keep this quite brief as I was running out of time.
corporate failure and divisional performance are my two weakest links, so I had a trouble in section b of the exam...
I was relying on (i) part of section a question but I realized that I analyze in much higher level than indicated in here...also for (ii) I suggested some metrics which don't exists at all (such as web-based revenue percentage) so not sure how it would be marked...
hopefully I would be able to gather 50 and look for the next (and the last) one...
when the results will be out ? 16th of july ?
8y ago#43I think thats where i struggled with Q1, trying to find something bigger than it was actually asking for. Not sure if i even wrote about the simple presentation issues in the end.
Yes results 16th July.
Good luck everyone.
@erinc355 said: corporate failure and divisional performance are my two weakest links, so I had a trouble in section b of the exam... I was relying on (i) part of section a question but I realized that I analyze in much higher level than indicated in here...also for (ii) I suggested some metrics which don't exists at all (such as web-based revenue percentage) so not sure how it would be marked... hopefully I would be able to gather 50 and look for the next (and the last) one... when the results will be out ? 16th of july ?Yes, 16th July.
Overall I don’t know how to feel about this exam.
Nonetheless here are my answers to the questions.
Part one of question 1 I started off by dissecting the mission statement into two. My response to that one question one was based on how well the performance measures related to the mission statement and how user-friendly the performance report was and the layout of the report .I managed to mention a few points on how the report did a good job in showing the revenue by division and also for the segmenting it by men women and children. I further spoke About the use of percentages to show operating profit margin and also suggested that the same should be done with regards to revenue. In addition to this I also commend the report on having comparative figures that’s allowing for easy comparison to prior years.
In terms of the performance measures I identified two sets of performance measures relating to the mission statement. The first part was with regards to providing exceptional shareholder value where the performance measures were earnings per share and dividends per share. As the question asked to critique the performance report I gave my opinion on the benefits and disadvantages of the performance measures in relation to the mission.
For performance measures relating to being the largest retailer in the country i identified return on capital employed, Market share and EVA. The same applies to these measures as I gave my opinion on how well they relate to the mission statement.
Part two of question one I identified three performance measures the first being revenue per square metre. My justification for selecting this measure was purely based on efficient allocation of resources and to see whether the organisation was making the most of floor space. My second and third recommended measures were to do with the strategies from the text with regards to increasing their online presence and increasing the use of technology. So my Measures were number of sales made online in relation to total sales and number of innovative awards received during the year.
Part three of the question was with regards to the value chain and supply chain. I simply spoke about how the value chain will create linkages that will assist the supply chain becoming more efficient and therefore reduce waste: I went on to talk about the benefits of having linkages and how primary acativities are supported by secondary activities and how this will benefit the supply chain.
The part on big data I simply defined the three v’s and I just waffled on this question as I was running out of time and had to simply move onto the next question.
I expect between 25/30 on this question.
With my options I selected question two and question four as I honestly did not prepare myself well on the Argenti score model.
For question two, It asked whether divisions and divisional managers should be assessed using different performance measures. I spoke of how the use of ROI as a measure of divisional managers performance will lead to dysfunctional behaviour and therefore mean that divisions are not performing to their full potential which would in hindsight affect the organisations performance. I also mentioned a few other points which I can’t recall at the moment .
Part B required an assessment as to whether the managers of green and blue should receive the annual bonus. I identified green as an investment centre and blue as a profit centre. When computing the ROI, for Green I did not include the allocate fixed head office costs and was able to compute an ROI of 15.3%. For blue I did not include the depreciation and the head office costs because the depreciation is to do with the investment centre and cannot be controlled by the blue, I was able to come up with an ROI of 14%. However as the note stated that the capital employed included capitalised research and development I took this into consideration and mention that under IFRS such capitalisation would not be acceptable . Therefore I suggested that if the capitalised R&D were removed the ROI would be above 15% and therefore blue should receive a bonus. I also took the closure of blue for Three months into consideration. Furthermore we were asked to assess the usefulness of using ROI as a divisional performance measure. I said that the use of ROI is not a good idea and related it to the rejection of the project by green and computed the ROI and the residual income to show that under ROI it is below the 15% target but with residual income it is increasing shareholder wealth. Thus meaning that projects will be rejected by divisions solely based on ROI target not taking into consideration the interests of the organisation.
Part C required the advantages of using residual income as a divisional pefomace measure. This was a pretty straightforward question I managed to mention 4 to 5 advantages.
Question four had two parts to it. Part A of the question was with regards to incremental budgeting. I spoke of how this was the correct choice of budgeting as the environment was fairly stable
with no changes expected in the future. However I did mention that the volatility in the energy market may require the need for rolling budgets.
Part B was tricky and I did not have enough time left. Identified causes of variances for labour being to do with cheap labour due to fixed contracts as stated in the text ( increment of 1% every 5 years) and for the labour efficiency spoke about the strike which may have caused more labour hours to be used than required.
For the materials variance, which was adverse, spoke about increase in material costs and a further increase in cost due to a delay in purchases being made.
Recommendations were along the lines of initiating fixed contracts with more than one supplier so as to hedge changes in prices.
I know my response is detailed. But please give me your thoughts.
Wish you all the best.
@princess16 I am in exactly the same shoes as you. Topics were easy but my brain froze, had no idea how on earth to put together a structured answer so that I don't put the same points under the same sub-questions, ended up wasting time, and left half of Q1 to move on to Q2 and then Q4.
If I need a resit, I will NEVER EVER start with Q1 again. I will ensure I do the 2 Section B questions so that I calm down and can focus on a shorter case study/scenario better and just then I will do Q1 ensuring I stay on top of time management.
This paper sucks, it's all about figuring out what the question requirements say, not enough time to digest the scenario under time pressure.
Does anyone remember numbers in Q4b? It was $1 difference in material cost due to supplier issues and $2 (or $1?) due to poor procurement?
8y ago#48@ds3ce That sounds like a good idea and one that i shall use for my resit!
I should have put down what i thought instead of over thinking it and wasting valuable time!
Q1 asked for 3 new performance measures using the info given in appendix 1 didnt it? Which is why i couldnt get my head around what to use. My obvious choice would have been the online sales measures but as they always say to 'answer the question asked' i disregarded these. Maybe i fell into the classic trap of not reading the question carefully too!
@klaudiuszfp said: Does anyone remember numbers in Q4b? It was $1 difference in material cost due to supplier issues and $2 (or $1?) due to poor procurement?I did double check the amount by subtracting quantity variance amount from total variance and it was $3.0 per kg... (actual quantity - standard quantity)*standard price*production quantity = total quantity variance (520-500) * 21 * 350 = 147.000 (actual price - standard price) * actual quantity * production quantity = total price variance (24-21) * 520 * 350 = 546.000 total variance in material given in the scenario was 693.000
@princess16 In Q1) i) I used the headings "Purpose", "Audience", "Information" and "Layout" to evaluate the performance report. I made sure I kept referring to the report, because students often mix it up and end up evaluation the company's performance, not the report and why the report is good and why the report is not good enough.
So basically in Q1) i) we had to write down the positives and negatives of the report , where highlighting the negatives (missing measures which would measure the important areas of performance, i.e. critical success factors) . I used the above 4 headings to make my answer more structured. Under the Layout for example you could mention the presentation of the performance measures. Here I was talking about how confusing the performance report was, difficult to understand, difficult to read, I suggested improvements in form of using less measures to draw the users/readers' attention to the truly important measures, i.e. KPIs relating to CSFs and I suggested the use of graphs and charts to make the report easy to read, easy to understand even by non-financial people because not every shareholder or director in the board will have finance background. I was gonna suggest the commentary to be included despite the fact the CEO said they will explain the meaning of the report's content at the board meeting but then I was running out of time so forgot to jot this down as an extra point.
So once you evaluated the report under i) , then under ii) you had to suggest 3 new measures which of course had to tackle the issues highlighted in i). Here is where I didn't write much and did zero calculations as a justification. I left Big Data and everything, moved on to Q2 (did all of Q2) and then did half of Q4.
Heaven knows if I will pass.... This was my 3rd attempt. I did practise soo much. I know this paper for me is now down to just pure luck and exam technique, nothing to do with lack of knowledge.
@princess16 said: @ds3ce That sounds like a good idea and one that i shall use for my resit! I should have put down what i thought instead of over thinking it and wasting valuable time! Q1 asked for 3 new performance measures using the info given in appendix 1 didnt it? Which is why i couldnt get my head around what to use. My obvious choice would have been the online sales measures but as they always say to 'answer the question asked' i disregarded these. Maybe i fell into the classic trap of not reading the question carefully too!No I think you're right. I wanted to put down online revenue / total revenue but since the question asked to calculate the suggested measure and there was no information about online sales in the appendix, I ignored this and chose revenue / floor space and some employee ratios.
@ds3ce said: @princess16 In Q1) i) I used the headings "Purpose", "Audience", "Information" and "Layout" to evaluate the performance report. I made sure I kept referring to the report, because students often mix it up and end up evaluation the company's performance, not the report and why the report is good and why the report is not good enough. So basically in Q1) i) we had to write down the positives and negatives of the report , where highlighting the negatives (missing measures which would measure the important areas of performance, i.e. critical success factors) . I used the above 4 headings to make my answer more structured. Under the Layout for example you could mention the presentation of the performance measures. Here I was talking about how confusing the performance report was, difficult to understand, difficult to read, I suggested improvements in form of using less measures to draw the users/readers' attention to the truly important measures, i.e. KPIs relating to CSFs and I suggested the use of graphs and charts to make the report easy to read, easy to understand even by non-financial people because not every shareholder or director in the board will have finance background. I was gonna suggest the commentary to be included despite the fact the CEO said they will explain the meaning of the report's content at the board meeting but then I was running out of time so forgot to jot this down as an extra point. So once you evaluated the report under i) , then under ii) you had to suggest 3 new measures which of course had to tackle the issues highlighted in i). Here is where I didn't write much and did zero calculations as a justification. I left Big Data and everything, moved on to Q2 (did all of Q2) and then did half of Q4. Heaven knows if I will pass.... This was my 3rd attempt. I did practise soo much. I know this paper for me is now down to just pure luck and exam technique, nothing to do with lack of knowledge. It seems like I have done quite wrong on evaluation of performance report and recommendation of new measures. I suggest divend growth, market position ranking and share price growth. What do u think?
Does anyone know how and if the link theory works? i understand its for those who just took their final paper.....please enlighten me
8y ago#54@ds3ce i did pretty much the same as you, although less structured in Q1 which is really annoying as i practiced a few 'evaluate the performance REPORT' .
Did a calc using revenue/no of stores but couldn't figure out how this could be of use so not much justification.
@Gabor, thanks! I shall be keen to see the examiners report, and answers if they publish them.
@ds3ce said: @princess16 In Q1) i) I used the headings "Purpose", "Audience", "Information" and "Layout" to evaluate the performance report. I made sure I kept referring to the report, because students often mix it up and end up evaluation the company's performance, not the report and why the report is good and why the report is not good enough. So basically in Q1) i) we had to write down the positives and negatives of the report , where highlighting the negatives (missing measures which would measure the important areas of performance, i.e. critical success factors) . I used the above 4 headings to make my answer more structured. Under the Layout for example you could mention the presentation of the performance measures. Here I was talking about how confusing the performance report was, difficult to understand, difficult to read, I suggested improvements in form of using less measures to draw the users/readers' attention to the truly important measures, i.e. KPIs relating to CSFs and I suggested the use of graphs and charts to make the report easy to read, easy to understand even by non-financial people because not every shareholder or director in the board will have finance background. I was gonna suggest the commentary to be included despite the fact the CEO said they will explain the meaning of the report's content at the board meeting but then I was running out of time so forgot to jot this down as an extra point. So once you evaluated the report under i) , then under ii) you had to suggest 3 new measures which of course had to tackle the issues highlighted in i). Here is where I didn't write much and did zero calculations as a justification. I left Big Data and everything, moved on to Q2 (did all of Q2) and then did half of Q4. Heaven knows if I will pass.... This was my 3rd attempt. I did practise soo much. I know this paper for me is now down to just pure luck and exam technique, nothing to do with lack of knowledge.I have learned about the performance report in technical article too like, purpose, audience, info layout, but I was stuck and could not think of this during exam. I just wrote whatever came to my mind if report looked good in bad with what? Beside the aim, does anyone notice about it's strategy like investment in new tech and small web presence. I think this could be mentioned to evaluate the report too.
I sat P 6 UK variant for 3rd time. If I did not passP 6 this time I would go for P 5.
P 7 was done very easily by me, so I do not understand why P 7 has this low pass rate.
If someone studied both P 4 and P 5 which one from them you would recommend ?
@princess16 said: @ds3ce That sounds like a good idea and one that i shall use for my resit! I should have put down what i thought instead of over thinking it and wasting valuable time! Q1 asked for 3 new performance measures using the info given in appendix 1 didnt it? Which is why i couldnt get my head around what to use. My obvious choice would have been the online sales measures but as they always say to 'answer the question asked' i disregarded these. Maybe i fell into the classic trap of not reading the question carefully too!I felt the same during the exam and wanted to highlight the need to adopt performance report to new CEO's plan to achieve aims of the company...therefore even there was no data given, I provided formula to be used in order to calculate two the measure I provided, web-based generated revenue % and investment in technological developments % within total capex...my third one was revenue per floor space...I'm very curious about how it would be evaluated...
@bukenya said: Remeasures, Revenue per square...use of floor space Profit per square....use of floor space Revenue per employee....productivity of staffDoes these measures address the current problems at Chiven? I think you u should suggest measures to address current problems at Chiven on dividend growth, dropping ranking, like that.
@ds3ce I totally agree with you about the paper. I failed in March with 47 due to poor time management as you had this time and that's why I did question 2 first and when I had the exactly same problems with you in question 1, I jumped to big data and then did question 3 so I left with 80 minutes for the last 35 marks of question 1. Then I wrote down all the bullets for the report and I made few assumptions for the new measures to propose without the pressure that I need to rush. I managed to write 15 bullets for the report and two measure proposals which I don't even know if they are correct but what I want to say is just be flexible and follow what you feel it works better for you.
I hoped the lesson learnt last time helped me out this time. If not, I'm changing to P7 as I'm not going to gamble again to guess what the examiner wants for my last paper.
Good luck to everyone
As long as we could justify on our writing points, and relate them to the scenario, examiner will not fail us. I do hope I pass worth my justified points above.
Good luck to all!
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