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FM*** ACCA Paper FM June 2019 Exam was.. Instant Poll and comments ***
7y ago#61@khilen said: My NPV question said that tax is paid “at the end of the year it relates to” - is that the same thing as tax is paid in arrears?that one confused me too.. but in NPV calculations, the cash flows are always year-end so I leave the taxes in the year (yr1/yr2/yr3/yr4). no yr5 so no arrears.
7y ago#62@liamb said: I think the 100% allowance in first year just means you just calc whatever the tax rate was of the investment (like 15% of £600k) and use that as a positive cash flow in year one - which made my NPV positivehmmm I did opposite. I actually thought that the R&D and depreciation was mentioned just to fool you because the question gave profits/(loss) and said that they were already included in the profit/(loss) calculation so I just accounted for the 100% allowances in the first year ($600/4yrs *80%). I then tax the figures and discount them to get a negative NPV. I advice against the investment.
@xanpech said: 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.It’s so frustrating isn’t it. I did about 8 past ACCA papers, 6 full mock exams and went through about 150 questions from the huge question bank, and still got stumped on a lot of questions that came up. ACCA really do make it so difficult and don’t provide the best resources to learn from. A lot of in depth knowledge I had didn’t get tested at all :( Fingers crossed we both did enough to pass :) good luck with your result!!
@liamb said: That working capital question screwed me too! I read it and thought ah nice easy marks, but couldnt get the quick ratio at allI know how to work the quick ratio out and still wasn’t getting the same answer as what they gave to work from :/ Baffling!
@ajaved5 said: I got that wrong, I started inflation at t1. What about the residual value undiscounted at 5%Inflating at T1 would be correct as far as I know. The figures they give are at today’s date so if it says £100 sales and 4% inflation T1 would be £100 + 4% then T2 would be £100 + 4% + 4% and so on.
@liamb said: I think the 100% allowance in first year just means you just calc whatever the tax rate was of the investment (like 15% of £600k) and use that as a positive cash flow in year one - which made my NPV positiveAhhh ok, I did that so hopefully my answer was correct :)
7y ago#67@tonim said: I don’t understand why you would inflate the current year as Y1, the current price, are the prices that are actually being charged... inflation is an indication for future years, how much MIGHT be charged based on a future trend of increased prices.thats correct.
7y ago#68@katie8223 said: Inflating at T1 would be correct as far as I know. The figures they give are at today’s date so if it says £100 sales and 4% inflation T1 would be £100 + 4% then T2 would be £100 + 4% + 4% and so on.Yes looking at the ACCA text, T1 is inflated
7y ago#69@nella28 said: Yr0 in NOW- not inflated. YR1 onward are future days .
7y ago#70Anyone remember the question on reason why the directors use matching as a hedging technique:
1) directors don’t understand more complex hedging techniques
2) so investors can understand the hedging technique
3) so that the company reduces the amount of the fx trades and number of transactions
4) something else
I selected 3 anyone else know if this is correct?
R & D costs are already been spent (sunk) well they were not added as investment so no worries about that but their amortization was deducted to arrive the forcast profits/(losses),
So what i did is i added the amortization yearly ,and the depreciation on the original investment of 600000 was not adjusted so no need to add it back but they said that information for tax saving purposes which was just in the first year as they mentioned that 100% is initially charged so over all of this gave me a Positive NPV.
Let me know what you think off this.
@snell123 said: Would of given a slightly high cost of equity, but that’s not to say my answers was correctWhat did you get for the cash operating cycle ?the days
7y ago#73@aliansari14 said: What did you get for the cash operating cycle ?the daysI got 58 days 40 days receiveables Less 30 days payable Plus 48 days inventory days Inventory 2.4 multiplied by 1.2 (growth) = 2.88 Cost of sales 18.3 multiplied by 1.2 = 21.96 2.88/21.96 multiplied by 365 = 48
@snell123 said: I got 58 days 40 days receiveables Less 30 days payable Plus 48 days inventory days Inventory 2.4 multiplied by 1.2 (growth) = 2.88 Cost of sales 18.3 multiplied by 1.2 = 21.96 2.88/21.96 multiplied by 365 = 48For the cash cycle didn't they say they were reducing the recievables days to 10 days? Thats why I got 28. I could be wrong though coz most ppl seem to have got 58.
7y ago#75@xanpech said: For the cash cycle didn't they say they were reducing the recievables days to 10 days? Thats why I got 28. I could be wrong though coz most ppl seem to have got 58.Think they said reducing by 10 days but I could be wrong
I got 58 days first then when I read over the question it asked for forecast figure not what was provided in statement of financial position given. So I would have adjusted the days by what was forecasted to achieve reduction of receivables by 10 days as well as payable and inventory to 30 as to meet their suppliers terms.
7y ago#77@keaney said: I got 58 days first then when I read over the question it asked for forecast figure not what was provided in statement of financial position given. So I would have adjusted the days by what was forecasted to achieve reduction of receivables by 10 days as well as payable and inventory to 30 as to meet their suppliers terms.Oh ok, what did you get then?
40 days.
I am not sure how accurate it is. But what I believe and adjustment would have been required to get the answer i don't think they would have made it so simple.
I got 76 days because they mentioned that inventory is kept to minimum which is the finished goods so for finished goods we use cost of sales but i didn't do that because they mentioned that they buy the material from supplier and the inventory is mostly in W.IP don't u think that we had to use the purchases they gave which we had to increase by 1.2.
as W.I.P inventory is calculated by W.I.P/cost of production,
And however you can't make an assumption if purchases and cost of sales are given that they will both increase by the same percentage.
@snell123 said: I got 58 days 40 days receiveables Less 30 days payable Plus 48 days inventory days Inventory 2.4 multiplied by 1.2 (growth) = 2.88 Cost of sales 18.3 multiplied by 1.2 = 21.96 2.88/21.96 multiplied by 365 = 48
7y ago#81Anyone have the fx question where the offer was lower than the bid price - you had to calculate the 3 month forward rate using the the inflation rates.
Think offer was 10.5 and bid 12.25
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