*** ACCA Paper APM December 2019 Exam was.. Instant Poll and comments ***

It was clearly mentioned in question 1 not to calculate any other performance measure except ROI/RI we only have to check its sufficiency and appropriateness I think
1st question was tricky

And in 3rd question

All mistakes, symptoms and defects were mentioned in question itself
If I am not wrong

@sanjanapaul1234 said:
To everyone who’s confused about question 1a regarding the Brand building costs and R&D costs-
Yes, it was leading to a long term benefit. It was mentioned in the question Appendix 1.
However, the question asked to stick specifically to ROI and RI. It didn’t ask to comment about EVA. EVA is the best method to find out the shareholders wealth because it makes adjustments to the profit and brings it closer to the cash flow which can’t be manipulated. Hence, in EVA we have to add back such expenditures leading to long term benefits to the operating profit.
However, in ROI and RI, they are a performance measurement ratio which considers the operating profit. Operating profits can be manipulated to get a better ratio (creative accounting)
Hence, in ROI and RI those divisional managers will minus those expenditures leading to long term benefits and calculate the ratio of ROI and RI.
For restructuring, since it was a questionable figure, I once considered restructuring costs and then I didn’t consider restructuring costs while calculating the ratio. And I wrote the explained that in this place restructuring costs aren’t considered because maybe the company’s senior management decides which place the business should be shifted to or located in and that divisional managers have a little say in making that decision…so…
I showed both the calculations of that restructuring costs to be on the safer side.
I am just praying that I pass this time pleaseeeee.

It can be arguable re R&D and BBM as it was saying in scenario it was for the longterm benefit of Company and not for their own division, so some can argue that it should add back to operating profit for ROI & RI, on another hand same applies to prestigious office which was to be benefit for division itself so should not be added back.

I hope both are right since we have given justifications for our adjustments and sometime in this paper nothing is right or wrong.

What did you write for the BSG part? can you please share and what metrics you have used?

I think I used the cost per item and idle time for the star since they wanted to be a market leader.
market share and defect rate for problem child,
and can’t recall what I recommended for a cow. what else we had to write as I was confused.
also for 3b problem with qualitative, I couldn’t come up with much.

ACCA published Sep/Dec 19 question, but this is only Sep 19 questions and nothing from December 19, so why called it Septemeber 2019?

Also, anyone noted that there was no embedded requirements in question 1 like September 2019?

@sanjanapaul1234 said:
Uhmm….I would disagree with the explanation of not considering R&D and Brand building expenses while calculating ROI and RI as ROI and RI are ratios in which manipulations can be done to the operating profit through creative accounting. However, EVA is a method that doesn’t allow such manipulations and adjusts the profits nearer to a proxy cash flow. Hence, according to me, if a divisional manager is measuring performance via ROI or RI, he will consider R&D and Brand building costs. Restructuring costs are arguable and so I toh showed calculations for both (with considering restructuring costs and without considering restructuring costs) (I had seen this type of an answer in the exam kit) That logic of long term benefits add back applies to EVA only.

1b- I described the whole BCG matrix and related it to the given case study. Financial KPIs like Sales revenue and profit margins for Essan (Differentiation strategy one) KPIs like Cost per unit and cost variances for Doilet (Cost leader strategy) and KPIs like Sales revenue, ROI, RI, EVA for Fada as it was a problem child and we have to either apply the invest or divest strategy to it. For investment, we have to check the ROI/RI with that logic I wrote ROI and RI. But to play safe, I mentioned Sales revenue in fada again because I felt that to decide upon a decision of divestment or investment, managers have to check the sales revenue trend from that particular division na so! I hope they consider and give me marks for Fada :p

I hope we both pass this time..

However again for R&D and BBM, the main point was not that it is a long term what it has distinguished that the cost was for benefit whole as a group and not individual division, I remember seeing that sentence.

was your answer for Q3 any closer to what I wrote above? I was struggling to put an answer for Q3 b.

Also, in ROI and RI, we consider Operating profits as per the statutory reports. In operating profit, R&D, BBM will be considered if an expenditure is made.
To make your point valid, a simple note of “considering R&D, BBM as capital expenses as per IFRS” would suffice I suppose.
If you’ve written it, you’re safe. The examiner can’t reduce your marks I guess if this note is mentioned.
However, I am not sure if the examiner considers such notes or not.

@markfairman said:
Lack of time was the biggest factor for me.

I did the two section B questions first then the Section A

I was not expecting ROI and RI. I left out the RI calculations and just added in commentary on the pros and cons of ROI and RI as performance measures.

I found the BCG questions confusing on how to link it to performance management. I focused on KPIs for the various stages Cash Cow, Star, etc. But not sure if I answered this correctly.

The BPR question again ran out for time here and had to move on.

Overall my impressions were it is as much a time exam as much as knowledge and analysis. I am not sure if this is a realistic way to prepare students for real life. To provide board level analysis and recommendations in such a rushed manner.

What KPI’s you have suggested?

Problems with Qualitative models
1) Internal focus, use PEST to overcome problem
2) Subjective in nature, difficult to quantify but use trend analysis
3) Grey area results in inconclusive results
4) Very limited financial focus, has to be a balanced view
5) Historical in nature based on single point in time, rather than considering periodic anaysis

I hope it helps!

@97752jenny said:
Problems with Qualitative models
1) Internal focus, use PEST to overcome problem
2) Subjective in nature, difficult to quantify but use trend analysis
3) Grey area results in inconclusive results
4) Very limited financial focus, has to be a balanced view
5) Historical in nature based on single point in time, rather than considering periodic anaysis

I hope it helps!

Thank you, so my points were not correct then I was confused about what to write

1- Its old model may not fit in todays business as world has changed.
2- It is a subjective model and ignores the financial information.

cannot remember what else I wrote.