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HI SIR
1. I have question for DEC 12 PAPER. FOR the Q1 part (ii), how to determine what performance measure is appropriate for which division. I read the answer, but I still have ideas and structure to arrange my answer,. when we met this type of question, how to think of it? in my opinion. I think there is no 100% to say which division should use which measure,, I can use the revenue indicator to measure all of division.
2. for Q3 in this DEC 12 paper. When calculating the EVA, some of the points I do not understand: for the page of 20 of answer, calculate the operating profit, I do not know why he examiner added the lost tax relief interest? what does it mean? second is calculate the capital employed, fir the ‘provision for doubtful debt’, why the number is not 0.5? how o get the 2.5? in our lectures, capital employed should be always the start of the year.
thanksQ2
Please bear in mind that interest is not an actual cash item. NOPAT is basically after deducting tax and because interest is a non cash item , it has to be added back taking into account the tax relief.
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