FM*** ACCA Paper FM June 2019 Exam was.. Instant Poll and comments ***

Easy but a boring exam. Nothing really difficult was tested. Hopefully a good pass. Good luck to future students.

Think I messed up on a Part C, some calcs and comments on aggressive or conservative approach. My answer was a bit of a mess. Went with aggressive. NPV only 5 marks wish it was for more. Hopefully scrapped a pass. Had nothing on shares.

Section A was quiet comparably easy then section where this quick ratio & cash operating cycle were were troubling ,other section B was fine Section C had Investment appraisal ,capital rationing, WACC,DGM,CAPM,ROCE,Islamic finance were tested.

Section A with very littlle calculations, mainly tricky theory. Section B was convertable loans, did anyone get that floor price right? Was very confused.. Section C NPV and WC question. Overall I thought I was better prepared for it.

Overall paper was not such balanced i am disappoint with my paper Hope for best Section c Q:Working capital Req1: how much decrease in cost if we order through EoQ (5 marks) Req2: recommend whether company is following Conservative policy or aggressive policy including calculation of profitability, financial risk, liquidity and solvency (10 marks) Req3: Relative risk between short-term and long-term loan(5 mark's) Q:Npv Req:1 calculate the Npv and comment on financial acceptability (6 marks) Req:2 Calculate the NPV as projects are divisible (5 marks) Req:3 dicuss 2 factors of hard rationing (4 marks) Req:4 usefulness of Roce as comparison with NPV (5 marks) Section B RISK MANAGEMENT (tricky mcqs especially 18 months money hedging question) Wacc (little bit easy) floor valur, convertible loan notes, market efficiency theory, and convertible theory Business valuation Section A ( remember some Mcqs) 1:Drag nn drop mcqs of transactions risk, translation risk and economic risk. 2: calculate the EOQ order quantity 3: working capital theory question 4: calculate the current spot rate while future expected and interest was given 5: calculate ratios of ROCE and ROE and compare with the financial object and say whether object are achieved or not 6: value for money 7:Normal yield curve interest question 8:fiscal policy 9:stocks market 10:SME's company finance 11: net reliasable value of asset

Yes me too

Has anyone found 16.7wacc and npv was negative?

How did you find it then, enough to pass? This is what I thought: 1st section C – Working Capital. Had Quick Ratio, Current Ratio and Interest Cover. – Had a working capital balances (receivables, payable s, overdraft and liabilities). Had to comment on whether they should adopt an aggressive or conservative approach. (I didn’t enjoy this one). 5 Marks for calculation and 5 for narrative. – Then had to talk about long–term and Short-term finance and risk in relation to this. 2nd Section C – NPV where you had to ad back depreciation (I think) – Then optimal investment schedule (divisible projects & mutually exclusive). – Comment on ROCE as investment appraisal method. Section B- Foreign exchange – there was one on PPP which I couldn’t get to the answer so had to guess. Spoke to another student after about this and he had the same issue…? Some other wordy questions in section B which were hit and miss. Section A – A few calculations were needed so this took longer than usual. Also some tough wordy questions.

Total risk = market risk + business risk. Can someone affirm this?

Section C was Ok I had NPV plus cost of equity/islamic finance question. A and B had a some tricky questions...does anyone knows what the answer to the one about "noise traders" was? Also for the pupose of stock market which ones were right/wrong?

I was also curious if it was correct that with weak form efficiency they would react to new information in a few days?

One of the mcq was what bond has the highest interest (and put in order) Zero coupon bond Unsecured bond Secured bond Secured bond with warrants

Also had an mcq with a presence share and had to calculate the cost of equity: 5% preference share with nominal value of 50 cents. Cum price of 34 cents. I calculated 7.9% Anyone else the same?

Section A and B were reasonably smooth, quite a lot of theory questions in there. Section C: 1) A working capital question which I found extremely tough. Even had the audacity to call the company Banter Co. Nothing banter about it! 2) An NPV calculation with delayed tax and directiors which refused projects that had a payback of more than 2 years. All in all not too bad but the usual acca excel limitations made it frustrating. Quite frustrating that the cost of capital was more or less omitted from my whole exam!

Also one of the mcq was to calculate the share price using DVM. I got 2.65. Another one was a drag and drop for futures and options. I had futures for the first one and options for the next. A question on calculating the forward rate of francs based on bid spot rate - I got 12.37 Also on that scenario calculated the cost of the discount to break even to be 1.39% And another question on that scenario was hedge using Mandy market - I got deposit c112k francs and borrow c$10k And another question on that same scenario was the main reason why that used matching fx to hedge - I selected to net off cash flows to minimise amounts and number of transactions. On one of the scenario questions (maybe Suri) had to calculate the forecasted quick ratio (growth 20%) - I calculated it to be 1 Also on that scenario you had to calculate the forecasted working days - I got 58

Yes had the NPV question with the payback - did you deduct tax? I didn’t and got 2.9 years . I said in the directors would reject as longer than 2 years but it did have a positive npv

one of the first skills paper i attempted,overall it was quite fair though kind of forgot about money market hedge

@snell123 said: Yes had the NPV question with the payback - did you deduct tax? I didn’t and got 2.9 years . I said in the directors would reject as longer than 2 years but it did have a positive npv

I got 2.9 years too but forgot to comment ?

Yes had the the Wacc question and got something similar MV of equity £325m MV of bond £237m

On the Wacc scenario, there was a question to calculate the cost of equity - I got 25.6 (or something close to that) anyone get anything similar?

It was before 2 questions before the Wacc Calculation (same scenario) The DVM & CAPM ones totally through me. Just put some random Things about taking into account growth and risk. Not expecting to get anything on that question. Didn’t have any questions on Roce except for in the mcq’s - did they achieve the Roce and Roe targets - said no and yes

@barbadoshk said: Let me think about that wacc one! Bad memory !! Did u have to calc it using dvm and then capm ? Or was that another question? My answers to that were very similar around 14%

I didn’t calculate using CAPM or DVM - did the full calc but not sure if that was correct as only 4 marks

@snell123 said: I didn’t calculate using CAPM or DVM - did the full calc but not sure if that was correct as only 4 marks

For that q we got told the cost of equity was 20 percent, had to work out the cost of debt though.

I thought the exam was a let down, after all that studying, barely any of the syllabus was examined. I feel like the examiners don’t really like you having all the relevant information, they make it very difficult to pass an exam just by reading the materials provided/distant learning. Really disappointed after months of solid hard work. I had the NPV question too and ended up adding the depreciation back in as it’s an irrelevant cost and also adding the r&d back in as that’s a sunk cost? Not sure that was correct though! I got a negative NPV and advised to not invest in the machine. Also, my study provider only taught us how to deal with straight line and balancing WDA’s..nothing about first year initial 100% allowance and what to do thereafter. I studied SO much and went through so many questions from the question bank, yet still struggled. I passed all other exams first time so I know what it takes to pass and I have to say, this exam was just pointless to study the whole syllabus for. May as well spent 1 week on just a few areas. Trouble is, you don’t know which little areas will come up!! Fingers crossed though...you never know :)

@xanpech said: For that q we got told the cost of equity was 20 percent, had to work out the cost of debt though.

Yes but there was a question before that were you had to work out the required return. It was something like current dividends value was 725m which equates to 14.5 per share with annual growth of 2.7% divided by share price of 65 then add the growth on

@snell123 said: Yes but there was a question before that were you had to work out the required return. It was something like current dividends value was 725m which equates to 14.5 per share with annual growth of 2.7% divided by share price of 65 then add the growth on

Oh yeah the 2.7 rings a bell, think we had to do the DGM and CAPM for that question then got told the cost of equity next question and asked to work out the Wacc.

Yes that right, there were two calculations. The CAPM one was with a beta of 0.784. Think I got 13.84 with rf of 5% and market rate 15%

@katie8223 said: I thought the exam was a let down, after all that studying, barely any of the syllabus was examined. I feel like the examiners don’t really like you having all the relevant information, they make it very difficult to pass an exam just by reading the materials provided/distant learning. Really disappointed after months of solid hard work. I had the NPV question too and ended up adding the depreciation back in as it’s an irrelevant cost and also adding the r&d back in as that’s a sunk cost? Not sure that was correct though! I got a negative NPV and advised to not invest in the machine. Also, my study provider only taught us how to deal with straight line and balancing WDA’s..nothing about first year initial 100% allowance and what to do thereafter. I studied SO much and went through so many questions from the question bank, yet still struggled. I passed all other exams first time so I know what it takes to pass and I have to say, this exam was just pointless to study the whole syllabus for. May as well spent 1 week on just a few areas. Trouble is, you don’t know which little areas will come up!! Fingers crossed though...you never know :)

I kind of felt the same way, did the BPP revision kit 3 times! And the past exam papers, but only 50/50 if I passed coz found section A and B harder than I expected and often you just have to get one thing wrong and lose the whole 2 marks. Most annoyingly I somehow had a blank on the price/earnings ratio question, then as soon as the exam was over I realized what I should have done and its not even a hard question, so I think it was partly exam stress getting to me aswell.

@snell123 said: Yes that right, there were two calculations. The CAPM one was with a beta of 0.784. Think I got 13.84 with rf of 5% and market rate 15%

How did you re-gear the asset beta to their equity beta? I struggled with that...think their debt/equity ratio was around 42 percent of the top of my head? I think I did something like divide it by 0.58 but was almost certain I was doing that wrong but hoping to get marks overall with own figure rule.

@xanpech said: How did you re-gear the asset beta to their equity beta? I struggled with that...think their debt/equity ratio was around 42 percent of the top of my head? I think I did something like divide it by 0.58 but was almost certain I was doing that wrong but hoping to get marks overall with own figure rule.

Oh I didn’t regear just used 0.784 - I might of lost marks there then