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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 depreciation2a) 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 drivers3a) 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
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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%
@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.
Of course. Capital as a whole is always 100%. It consists of 2 sources: debt and equity. So their sum can not exceed 100%.
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Thank you, that was my calculation in the exam but the comments on this forum made me second guess myself!
The WACC calculation is stated as a common pitfall on ACCA website, link below. See point 2. WACC below:
Debt/Equity = 30% so $30m for debt and $100m for equity. Total capital is therefore $130m
WACC uses the post-tax cost of debt, but the data provided is for the pre-tax cost of debt.
WACC = ((15.7 x (100/130)) +(( 6.5 x (1 – 0.25) x (30/130)) = 13.2%
So for APM exam, 35/135 and 100/135 is correct.
@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.
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 economicalLeague 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.
On question 2a I would have to agree with rsi 88 as the question asked how ABM could be used to improve strategic business performance same question as dibble and there was a full technical article in this area so it relates to operational ABM – identify activities that do not add value and strategic ABM – customer and product profitability anyalsis with an addition benefit that it can improve investment appraisal and performance evaluation …
Question 2 was them problems of implementation and would it be suitable for various products division this I think it where you assess whether ABC or Absorption would be more suitable to each product …. and then you describe problems with implementing ABC /ABMActually after reading comments i am bit worried ! when i was giving the paper i made a plan to stick to the rule and do the full paper and for that i wrote all the paper, whole of it but the quality of my answer may not be that good and specific because in order to be more specific to the scenario would require little more time. It makes me anxious when people say the they attempted the paper too many times.
@chullbulla said:
Seems like more we read more we get worried, now I am worry about my Q2 answer I believe I will not get any marks for using ABC in part ADont u worry buddy, Allah will bless, all of us ! in advance financial management i was unable to complete one whole 25 marks question but still with allah blessing passed it 51 marks.
@tamandawilliam said:
Did the BPP revision kit for 2018/2019 helpedyes kaplan kit is good !
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