*** ACCA P5 September 2017 Exam was.. Instant Poll and comments ***

@sa1pw said:
What did you guys write in benchmarking part?

Anyone?

@oleksiiponomarenko said:
I wrote about different economy, accounting practices in countries, scope of the products, grants from the government as factors influenced on benchmarking results which should to be taken into account

I wrote:

-Customers difference, they have adopted the electric cars and if now business tries to flow up and do something similar to improve (as board using results to move to electric cars) they need to consider that customers may not have electric cars here which may devalue exercise of benchmarking
-Economy is different, one is going up other is depressed. So ultimately that will show up on results also if any management steps are to be carried out economic scenario of our country must be considered
-Non financial figures are not available, so we can’t actually see what other company is doing better and what we actually be required to do
-Reliability of figures, the figures maybe manipulated and not giving fair representation so any decision taken upon benchmark basis maybe inaccurate!
-Political difference, Government is encouraging the development in benchmark company country, but it’s not the case here. Also there are issues like different treatment like capitalization of development so comparability is an issue and how fair the figures represent
-The industrial difference like components availability and cost, veeland has low cost components available to produce, this will not only reflect on profits aslower cost but also if business are to take better decision for performance management and follow up benchmark company and it’s activities, they need to consider industry, components price and availability
-The debt market is different, loan are easily available in benchmark company country from which they have invested including new IT system but we may not have such access to debt like benchmark company to invest and make use of opportunities which may cause trouble despite us knowing what to do from benchmark results

Anyone else?

@vaskont7 What did you mention in Benchmarking Problems for Performance Management?

Let’s see if points reconcile:

-Only financial data given but it’s non-financial data that shows difference between the two business and what board should really plan for
-There were issues with benchmarks such as the choice of measures for benchmarking, Also one company was capitalizing development so by nature will be tough to evaluate them using certain financial measures and then use figures to assess
-Benchmarked company’s customers had moved to electric cars while in our country there was no such trend so benchmark and all these figures will be useless if we can’t manage by carrying these operations and going ahead in operations
-Economies of both countries were different so by nature their performance will be different making it rather tough to evaluate if benchmarking will provide value and how can business take account of varying environment in our country to manage(Developing economy vs an economy on low)
-Govt and other such factors were clearly in favor of of electric cars and development expenditure (Benchmarked company hd even made expenditure on new IT Systems), So due to such external issues performance difference will arise and provide trouble in managing performance
-Reliability of data can be questioned which will make further issues when managing performance using the data which in first may not be reliable (profits and capital can be manipulated figures)

@lucamucciaccia said:
Yes Impairment was given in the 1st paragraph but how did you treat it?

I didn’t add it back to arrive to EBITDA….

Deducted impairment from p&l expense, and add answer to operating profit

@vaskont7 said:
more or less we have the same points… i think I have 4 points as you….most of them are comon sense points….i just had an extra point (but i am not pretty sure whether its a good one), telling that the benchmarking exercise is better to have been performed against a company that is on exactly the same phase and not on a company that has already moved to the new electr sector 2 years ago..and that due to the fact that it could be seen as a “manipulation” of benchmarking exercise to select a company that has performed a shift to a new Indurstry and the results are already known…

And what did you mention for ROCE and EBITDA as performance measures for benchmark?

I suggested, For ROCE:

-Considers company size (both companies were of different size so different capital base)
-Considers returns for shareholders as how much profits made against capital, measuring business efficiency
-Can be very much encouraging dysfunctional behavior by supporting company that uses old depreciated asset (it was evident that the company with old assets had higher ROCE)
-Discourages Capital Expenditure and does not consider long term value for SH
-Company in veeland was capitalizing development costs, so it was likely to have lower ROCE as it’s capital base got higher

EBITDA:
-More closer to cash as removes assumptions like depreciation, so shareholder perspective better evaluated
-Less subject to manipulation with a assumptions like depreciation that can be easily manipulated by accounting treatments
-Better shows earnings and returns, As removes uncontrollable factors, so better evaluated performance of both companies With respect to their earnings
-But does not take account of finance costs and WACC, nor the capital invested, So potentially investors could be seeking a very high return and coat of capital for company( Veeland company had invested alot in debt)
-Also does not take account of size of the companies as evident that one company had significantly higher capital base so, A larger company is bound to generate more profits/earnings (It’s a nominal measure)

@pecukinjsh said:
Did someone noted, that for benchmarking exercise financial data was given for different years for both companies? If I remember correctly, that for second company it was Y2015, but for first one it was Y2016 or half of Y2017, something like that.

I didn’t notice this.

@vaskont7 said:
Well we havee some reconciling items…hehe. :p :p. just kidding… more or less is the same .. we are the same at 4 from your points (i didnt write down the 1st one..but i saw that most of you did…so itt was a kind of clisee, but my practise at exam kit book wwas poor)… i also mentioned that it was not a good choise to benchmark against a company that its on a different b phase… (the had already moved into electr cars 2 years ago) cause is a kind of “manipulating” benchmarking exercise…it would be better to benchmark against a company that is exactly on the same phase….however i dont know whether that was a good one. it may be stupid…anyways..just wrote it down to have 5 points ( it was a 7 points question, isnt it?)

@vaskont7

It was 9 marks question and I wrote about 7 points in it.

What did you write in dashboard question?

These are my points from dashboard question:

-Benefits of EVA being a very good measure in dashboard(3 Sub points)
-closer to cash
-shareholders long term value
-supports non financial behaviors like r&d and discourages dysfunctional behavior

-TSR: – considers shareholder return and dividends which will be vital
-in particular thyme recently lost cash and TSR will show it’s share performance and incentives it’s taking

Operating Margin: Basic measure will show profits from the operations, so good to evaluate profitability

Design: Very key part in manufacturing sector, leads to competitive advantage and critical factor to customer satisfaction, But there was no measure regarding design quality/safety as thyme’s engine recently failed

Delivery: Sells internationally so delivery is obviously very vital, also it leads to customer satisfaction as they will be depending upon us and is a good measure of level of customer service we provide (also one of thyne’s main objective)

But I did find out one flaw with it that there was no measure for the customer service such as TECHNICAL QUERRIES RESOLVED, now if we are producing engine and our customer is producing planes, their staff and management may have technical querries, We may need to respond to those immediately to help our customers.

-# of products set right at first, Also supports TQM approach of the, very good measure to evaluate how good our quality standards are and how well do we produce the things without defects that lead to lower wastages as well and efficient business cycle.

-Revenue Growth: Shows the growth in revenue and if we are to aim to be world class, we need to broaden ourselves up, so need to ensure a good revenue rise so worthwhile to have that in benchmark.

-Market Share: We need to know where to we stand right now and this is what market share in the dashboard tells us, if we are aiming to be higher and better we need to know where we are currently. Also takes account of competition as how good we are against them

-Dashboard was well presented and was not overloaded which will lead to board having ease to use these figures

-Management commentary also provided ease to know what the figures represent and making use of dashboard areas

-It showed a good trend from past two years which definitely shows how we are SHAPING UP to the future, including policies like TQM

-However they may have produced some external information rather than budgets to make it more useful (this could be due to govt being obsessed with budgets) and also some graphical representation of KPI would’ve been better

-All in all it was a well designed dashboard which covered good areas. And was rewarded due to it’s positives with respect to dimensions of performance being covered

@tobi6 said:
This seems to cover most of the points on the dashboard. I used a balanced scorecard approach as the dashboard covers financial perspective, customer perspective, innovation, and internal perspectives. I then drilled down on each of the indicators under each perspective. Overall the dashboard is strategic, simple, and shows clarity in terms of PAIL, purpose, intended audience, information provided, and length.

Balanced Scorecard could’ve been used but I refrained and went for an overall comment because it wanted to know why the dashboard got the award in which you had to mention good points of the dashboard as well as it’s indicators although I mentioned some drawbacks as well but overall it was good because it’s positives we’re alot more than negatives.

weldone everyone, wish us the pass we desire..

@fumsky002 said:

@tobi6 said:
This seems to cover most of the points on the dashboard. I used a balanced scorecard approach as the dashboard covers financial perspective, customer perspective, innovation, and internal perspectives. I then drilled down on each of the indicators under each perspective. Overall the dashboard is strategic, simple, and shows clarity in terms of PAIL, purpose, intended audience, information provided, and length.

my oh my….this is spot on, with analysis using these, I doubt if I will pass this paper. didn’t even occur to me to use these. wowww, weldone, nice one