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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 valuationSection 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- Topics: 0
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Yes me too
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.
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?
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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- Topics: 0
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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!
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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
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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 npvone 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 npvI got 2.9 years too but forgot to comment ?
I also got the waiting capital cycle 58 days and the quick ratio question at 1.
Had an EOQ question in sect A, something like 20,380 ish?? Can’t remem exactly.. also NPV calc for 1st question I got 15700 I think?
Seemed to be a lot of calc divi growth and share price, hedging etc.
Sect B hedging questions confused me with the loan notes and loan, Pesos.
Did anyone get the sect c question NPV where you added depreciation back? And what about the R&D had been calc into profit/loss figures, did this have to be added back too? Mine was negative anyway.
Also wacc question, cost of equity was given but I got loan notes 14% and wacc 16.7 I think?
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Yes had the the Wacc question and got something similar
MV of equity £325m
MV of bond £237mI also got the Islamic finance questions:
I put for equity finance options: musharaka and Mudaraba, spoke about different partnerships involved?- Topics: 0
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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?
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