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

how many marks are going for EVA calculation? I didn't get enough time to write the commentary part...

Probably about 9 I’d say

I wud say i was only able to answer about 70% of the questions. Was just too time pressured. The exam wasn't difficult so to say but time was needed to write out quality answers. Fingers crossed. Hopefully the 70% i answered gets me a 50 lol

It was Ok, but q2 about ABM was NOT worthy of a 25 mark question, it was like as if the examiner had run out of ideas, the ABM part should have been 10 marks at most, and the rest of the 15 should have been some other topics. Maybe something to do with JIT/TQM/Kaizen etc Waste of a topic and a waste of a question, another syllabus topic could have fit that slot better.

Hi, I have calculated EVA correctly step by step but in place of writing negative EVA, I wrote positive EVA and by mistake I did analysis based on positive EVA. How many marks approximately the examiner will deduct? Please reply

Was a fair paper. Time pressured as expected. Good thing was the report evaluation in q1 gave a bit of a headstart. 6 pros and 6 cons link to goal done although more difficult to find pros on the report than cons. I dont think people should worry too much about messing up EVA calcs. 14 mark question (8 marks calc 6 marks pros and cons of measure). Usaully get a 0.5marks per adjusment and 1 mark for EVA,WACC,Capital Employed (maybe 2 marks for CE)& stating whether its adding or destroying value. Intergrated Reporting in Q1 was a suprise topic but was not too bad i guess. 2 marks each on Human Cap,Financial cap & Social/Relationships cap + plus link with case e.g Health Groups sugar tax info for unions etc. Focused ob reporting needs for wider stakeholders and type measure there should be. Q2 on ABM took more time than expected. Was hoping Corp Failure would come up. A lot of info on the 3 products req for application marks. Stated the jargon on ABM (strategic + operational) probs worth 4 marks. Had to look at the info for all products think ABC/ABM would benefited the high volume product as cost per unit would have reduced and it was in competitive market so benefit of gaining competitive pricing + margin. I just broke it down per product and put 3/4 points on each. Q3 was ok. Got a bit streched for time on league table limitation so wasnt able to link to much too case.

You can only get punished once for a mistake . as long as the method is correct you will get marks

Was WACC 35/135 and 65/135 ??? overall 7.4% I got minus 5mill EVA ABM was tough . Overall my writing was appalling , the time pressure is something else . For league tables there were huge ramifications if the non weightings were wrong or info collected was not right , teacher laid off and schools denied funding ,and the risk of sending child to the wrong school . Also needed huge amounts of staff to compltee the league tables . who was going to pay for this the tax payer ? or is it voluntary ? I wasted time drawing blank on the outcomes for BCG i nearly died , unbelievable rookie error . If i dont pass that is where i lost easy marks .

it was 35/135 and 100/135 of course f@@@@@@ck marks gone there

Don't forget to adjust the debt % to get post tax debt %, the figure shown was pre tax.

Ya i did that , I just messed up my debt equity ratio ... EVA was meant to be my strongest area and now looking back i was dropping marks so god knows how many i dropped in other areas ...

I think since many are still concern about getting the right EVA amount, here's something that can give us the idea of the marking scheme - December 2015 (Iron Chicken) Q1 Economic value added Calculation: 1 mark for each of: - Research and development - Depreciation on leased assets - Tax paid - Capital employed year start figure - Non-cash expenses - Research and development - WACC - Economic value added Maximum 8 marks For our sitting (Vultures Retail) - since it's a 14 marks asking students to - Calculate the EVA - Discuss the outcome - Evaluation of EVA methods. We can probably gauge how to allocation the 14 marks into those 3 parts. hence inaccurate EVA perhaps only loss 1 mark at most, but the rest in your workings still gain some marks. Most of the comments here got a Negative EVA, so the discussion part would probably be on right track. Cheers!

I put debt as 35% and equity as 65% as it had debt 35% of debt + equity. This is different from debt being 35% of equity as has been the case in previous exam questions I.e Iron Chicken

its formula was debt/debt +equity So i believe it is 35/135 and 100/135 I came out of the exam thinking i passed and with every passing hour I think I have failed .

EVA was negative alright but WACC was about 10% so the equity @ WACC rate meant a negative EVA of about -8m... anyone get this or near? Found ABM question so tough. How did people approach the shareholder question?

I got around -9m WACC around 10% So NOPAT 1m - capital charge 9m ??

I did the same but also added back in debt financing costs adjusted for tax

How did people answer the shareholder question in #1?

Q1- i) I evaluated the performance report in light of the strategic change (new website, closure of stores and new mission). This was ok but hope I got enough points down. ii) Intergrated report- the three sources of capital (financial, human and social and relationship). I basically said the financial aspect wasn’t shown as it gave only the profit and loss account side and now the capital invested. Basically wrote the same thing for human and social and relationship as there was only a total for staff costs. iii) struggled through trying to understand what the question and situation was about for the stakeholder Mendelow matrix- hadn’t seen anything like this before. Iv) EVA was a fair enough question although I ended up with -1.3m. I left the depreciation in the accounts in and deducted the economic depreciation 2a) ABM. Tricky but loads of examples in the scenario. Problem was trying to piece these together. I put that the large amount of overheads are being allocated by direct labour hours and this isn’t fair for products which don’t have high machine hours. Also that a high amount is incurred before production and these can be reduced through better planning. 2b) ABM problems- Information systems aren’t compatible Hard to identify cost drivers 3a) only managed an indicator for economy and efficiency. Economy- salary compared to national and average hourly pay against national average. Conflicts because this resulted in higher turnover for school 1. Efficiency. Not sure if I wasted my time but I did the percentage of students which exceeded targets per teacher. Effectiveness/ didn’t have the time. 3b) limitations of data and league tables: Downward cycle of schools which underperform Manipulation of school 1 who might get students to do weaker subjects Subjective in the way expectations were set Incorrect data carried over from past schools in arriving at expected Schools shouldn’t be measured on the same thing if they have different objectives. The targets were only for kids that leave at 16 whereas they may have found employment later in life. I changed my approach and gone for quality over quantity this time round in terms of the depth of my answers. However it means I’m not giving for example 12 points for a 12 mark question but 4 instead Overall this was a really time pressured exam which seemed to have far more content than December (just failed). The amount of content to be absorbed and then written especially for the 25 markers is unrealistic in my opinion. Isn’t fair and is dissapointing that the depth and amount of the syllabus comes down to a frantic 3hrs odd.

Q1 was fair I think with the exception of the integrated reporting part , for how the current report related to integrated reporting , for financial I put down the interest cost reflected for human capital I put down staff cost and social.capital would if been the health public pressure group. Still concluded report had very limited info in terms of IR. Q2 should of been maybe something to do with quality costs , or corporate failure or even BPR . ABM I tried relating much to ABC and key point was that it could be used on strategic level to identify which products and customers to focus on also which activities , added value and required more focusing on. But I did not answer properly and limited time. Very limited Q3 was okay it was a surprise but it was relatively easier then ABM , managed to.answer th at.in 30 min Overall I think.it was a fair paper with the exception of the 25 mark questions requiring much more time. Wrote second attempt

Coming back to the debt / (debt+equity), who calculated 35 / 35+100? My understanding is debt+equity will always equal 100%, therefore the calculation will be 35/(35+65) so debt = 35% and equity = 65%

I did 35/135 and 65/135 It should have been 35/135 and 100/135

@bennet846 said: Coming back to the debt / (debt+equity), who calculated 35 / 35+100? My understanding is debt+equity will always equal 100%, therefore the calculation will be 35/(35+65) so debt = 35% and equity = 65%

Agreed.

Thank you, that was my calculation in the exam but the comments on this forum made me second guess myself!

@chullbulla said: Just cant stop thinking about result :(

Hello Chullbulla is this time your 3rd time you take P5?

@mmcarey Sorry to burst your bubble mate but the scenario clearly said “ DEBT/DEBT+EQUITY not DEBT/EQUITY. Agreed that the common pitfalls state that if the exam mentions D/E then your logic applies. If DEBT/DEBT+EQUITY equals 35% then this means that the equation will be 35/35+65. Hence, Equity being 65/100 and post tax debt being 35/100 * (1-0.30).

Hi have to agree with @lukman94. The 35% ratio given clearly had the calculation method after it stating (debt/debt+equity) which means that the debt is 35% of total capital, therefore equity is the remaining 65%. It is the opposite to how it was calculated in the Iron chicken past/specimen paper which did use (debt/equity). I'd say if you have sat P4/AFM this was a pretty common check you'd look for when calculating the WACC. Not to mention the full WACC formula is made up of [equity/debt+equity]Ke+[debt/debt+equity]Kd-1T . Essentially the second party of the formula is the 35% (you then just had to multiple for the Kd adjusted for tax) It did seem a bit unfair though for those that hadn't maybe sat AFM to switch it up like that following the 18 specimen. However i doubt there was more than one mark available for this, so I wouldn't fret. I found Q1 of the paper quite doable, and Q2 and Q3 reasonable, the issue was definitely time. Whilst in Q1 the scenario was roughly in the order or the questions making it quite easy to follow through and answer bit by bit, I found that Q2 and Q3 seemed to have me jumping back and fourth in the long text wasting quite a lot of time and getting a bit lost in the information. fingers crossed to everyone.

@rsi88 I don’t think you have to have to have sat AFM to know the WACC formula to the tee. The WACC is tested in both F9 and P2. In addition to this, the formula was clearly given in the text. For those that missed were clearly dwelling on the specimen paper and failed to understand the scenario. All in all, I do agree with you in terms of the time allocated for the exam. Q1 was very doable, whereas Q2 & 3 had lots of information that had to be processed. Fingers crossed for a pass.

I started with Q2 as in brief review of the 3 questions I for some reason felt this was my best area. Regretted that later when running out of time and rushing q3 which once getting into it seemed much easier. I don't think I took the approach most here have said they did evaluating each product group for ABC. Instead I went for something a bit more like past paper question Dibble March/Jun 16 part b. The question had mentioned improvement to strategic planning so I went down the customer and product analysis route drawing things like more accurate pricing and costing etc from the scenario. In hindsight I probably wasn't detailed enough. But as it had specified ABM rather than just ABC alone I got the impression it wanted more than just whether ABC was appropriate for each product which in past paper dibble was part A. Its likely I got this wrong and won't know until the examiners article comes out. But I would definitely recommend viewing that past paper as to me it was the most similar to the Q2 this sitting.

@chullbulla said: Below are my answer summary of what I remember, your comments will be appreciated. Q1 a Performance Report: Only financial, when objective includes non financial like high quality item, competitive advantage. no market share or other ratios, just a P&L, layout is not what board expect, No commentary. no comparison with last year or competitors, ideally should have budget for next year due to move to website sale and strategic change, no R&D amount no Balance Sheet items which will be important for Investors. Integrated Reporting- I think I confused it with CSR and said should include non financial information for other stake holders and current report only showing financial not enough info for integrated reporting, may get some marks ?? Stakeholders: Employee should not be ignored but need less effort. Investor as long as the company is not risk of failure and financial trouble they are fine.management should take seriously, Health group keep informed. EVA : Messed calculation but may get some marks for at least putting formulas correct ?? Evaluation : Complex and Costly, ignores the accounting policies, also non cash item excluded, encourage investment, show value for shareholders. Q2 ABM assessment: Window, Competitive market no use of design cost little customer Department use. Glass : More use of Customer Department some may be of design cost Conservatory : Bespoke Design more use of design cost and customer department and procurement. ABM problems. Complex Costly, Need training and new IS I added that Conservatory revenue is more due to expensive item and design cost shared by others which reduce their profit , should have included in part A may be? hope I get some marks. Q3 School 1 Economical , measure total salary of all teacher/ no of students School 2 more effective but I struggled to get Perform Measure. Problem is to get effective its hard to be economical League Table: not liked by parents and teacher, different school have different operational objective like also no mentioned of school facilities , costly and complex as need more staff. Schools can alter data to show better performance, head teacher may spend more on areas like achievement and ignore others. Hope I done enough but not sure :(

your analysis is superb ! i just wanted to complete the paper there i think the quality of my paper declined a little bit because if i had gone for the quality then i could not be able to complete the full paper.