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I gave a cbe exam and finished in about 2.5 hours without rushing at any point. The mcqs were difficult though since quite a few had many smaller parts and getting any one wrong results in a zero for that question.
One 20 mark question was to calculate npv with a government subsidy tied to sales volume. And then to calculate sentivity of npv to sales volume, which was a tiny bit tricky.
The other 20 mark question was to calculate WACC, fairly standard and then to comment on directors finance suggestions.
Overall, the 20 mark Qs were easy
My section c was very wordy – a 4 mark NPV, a PI decision, discussion but not calculation of EAB and real/money method and then 8 ratios and commentary around financing strategy. Had my extra 5 questions in section B. Finished in 2 hours
First time sitting CBE exam and did not like it more. But first time that I finished 45 mins earlier. Section A and Section B were quite difficult for me with many questions on fx hedging, FRAs, futures etc. Section B had more questions than usual. Section C, on the other hand was straightforward. First q was on calculating IRR with 11% and 20%. Second q, was on WC management with calculating many ratios and comment on their investment and financing policy. They were too conservative, in my opinion. The only difficult was with Cost of sales and credit sales, which were given separately. I calculated 80% of credit sales and used that figure to calculate the ratios for the inventory. Anybody did the same?
Hey! Did anyone got the question about calculating NPV with gov. Subsidy? gov subsidy was non-taxable.
Mine was “okay”. I’ll be disappointed if I haven’t passed. One question’s wording did annoy me though. There was a multiple choice question on market efficiency, and you had to select if some/all statements were true.
The first two statements appeared to be true, but the final statement was something like this:
“It is not possible to gain an advantage by insider trading when the market enforces a policy that companies must quickly release new information.”
Now, in a perfect world that’s true. But I opted for that to be not true; markets may well enforce the policy, that’s not going to completely stop individuals/companies getting around it.
@erika21 I’m curious, why use 80% of Credit purchases for the ratios when cost of sales was given? For the ratios I used cost of sales (for both 20X8 and 20X7) except for Trade payable days where I used the respective credit purchases figures. I’ll admit, perhaps I’ve missed an important piece of information in the question.
Either way, I also stated they were too conservative, and holding on to way too much WIP and finished goods. I also commented that they could have asked for longer credit terms with suppliers, and also improve their credit control due to the trade receivables being so high in 20X8 compared to 20X7.
There was something in the question that 80%of the credit purchases were spent of materials. That is why I used that figure. But not sure that this was correct at all.
I used 80% usage for raw materials then cost of sales for other 2. I should have used credit purchases tho for payable oops. Also said conservative
My other question was a 4 mark npv and a investment decision question using PI then a description of EAC and real/money method. Confident of a pass
I had lot of problems for section A and it was easy and I also had some theory questions which was little tricky. In section b problems where easy and theory was not so tricky than the section A. For section c I got a npv question and a question for calculating working capital ratios. The main problem for me in section c was the theory. I didn’t understand what they want us to explain about….. Overall it was OK, hope I don’t fail at 49 or 48???????
My theory was around conservative/aggressive working capital and financing. Also discussion of EAC and real/money method
Bah, I must have missed that 80% materials line. Still, that should have only affected the ratios for Raw mats. Really hope I haven’t royally cocked this one up!
Still on the subject of the working capital question, did anyone else recommend a JIT system?
But is relevant. As they maintained high level of inventory and if the business nature does not require it, it is a very good comment.
I also remember a q for TERP, I got 6.60 for TERP and 5 for rights issue share price.
I also got 19% on the IRR q. Anyone else?
I put the same for terp and issue. I understood the question just not written that way. Was 40p value per share which was 1.60. So 5 issue which then gave a terp of 6.60 and a 1.60 value
My q gave 7$ current share price, 1 for 4 rights issue and rights valuation of 0.4 $ per existing share.
IRR was on the q for 11% and 20%.
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