General Queries Topic 8

You should try to choose a comparator that is both within broadly the same business sector (has similar products on offer) and if possible within the same country. Their size does not have to be the same as the point about ratios is that absolute figures are not relevant for most of the comparisons e.g.you are mainly comparing profit percentages, inventory turnover, ROCE and liquidity ratios and the like. If their sizes are significantly different then this is something you should discuss when setting out your limitations.

Ideallly they should both report under the same accounting reporting standards as the issue where these differ is that different bases may be used in arriving at the figures you use in your ratio calculations. If this is unavoidable where the figures you are using in your calculations have been affected by the standards used, you need to comment upon this in discussing the results and indicate that this may have limited the validity of the comparison.

hi trephena, do candidates have to do adjustment on the figures if the company is a parent company?

Just a few quick questions!

1) My PDF editor has stopped working. This means that I’m unable to cut the essential pages out of the 65 page financial statement documents.

Will I be marked down if I include the entire document?

2) The appendix – I’m assuming you upload each document individually? Should I make a separate appendix document (eg. app1 fs2016 app2 fs2017) etc etc.

3) I have done a survey. Am I right in thinking I need to upload a blank survey, and the results?

4) I wrote a script for my presentation to ensure it was over 15 minutes – should I upload this along with the slides?

Because I’ve not seen the screen for uploads, I’m a bit anxious about it!

FYI for other candidates;

– my reporting periods are three months apart and I have mentioned that this is a limitation for ratio analysis.

– my companies have different reporting currencies, and report under different frameworks. The only figure I translated was EPS, and I listed the rates I used providing a link to the website I found the rates on. They are ratios… they, in theory, should be comparable and this is one of their strengths. It doesn’t matter about the currency difference. I’ve noted the difference frameworks as a limitation, particularly as one was US GAAP and one was the German GAAP. I mentioned my studies, and how I have not looked at them in any depth.

– I used PESTEL and SWOT. I integrated words about the ratios throughout these analyses and guided the examiner to them. I did the same in ratio analysis, and integrated information in the analyses that may indicate why the company’s ratios have fluctuated.

– In my conclusion, I copied and pasted my questions and directly answered them, and finished off with an overall conclusion. This ensures I am clear about my answers and brings it all together.

– I only used graphs in my presentation as it demonstrated variances better. In my presentation I made little or no reference to the actions or limitations of my project, only my findings.

– I did not analyse the comparator any more than ratio analysis and used this as a limitation for my ratio analysis (the other company may have had significant events I’m unaware of etc etc).

– My SLS, I read all of the samples OBU have one their website and structured mine in very much the same way.

Hello,

1- For my ratio analysis I only used extracts for the figures I needed. OBU state that you need to attach the income statement and balance sheet where necessary.

2 – the appendix is one large excel? Hmm… I get the impression from the pack that it can be PDF or excel.

3 – I wanted to gather primary data on the external market for my PESTEL and SWOT. There are no guidelines to suggest it is ‘not appropriate’. My survey allowed me to see variations between information I found online and then from my own sources. I am unable to tell if the information I gathered online is biased. I know my own source.

My question was, how do I give this information to the examiner? Is my understanding from the pack corrected.

– a blank survey and my results.

I’ve integrated the data in to my report already.

4 – the pack says your presentation needs to last for at least 15 minutes, not limited to. When I say ‘over’ I meant at least 15, maybe 17.

Never mind.

Hello maryam20,

In part 2, you explain the models and limitations generally from a textbook perspective.

In part 3, you apply the models(the theory from part 2) specifically as it relates to your organisation and achieving your objectives/ research questions ,ofcourse at the same time you are evaluating information, which is what counts for the majority of your overall grade.

Points for application come mostly from choosing appropriate models relevant to your topic

Yes, that is how the structure should be, you will find that a major challenge of the RAP is producing an adequate work that is within the word limit. This means actively making choices to only include the most suitable information and avoiding unnecesary beating about the bush.

Try your to stick within the OBU suggested word limit for each part, ofcouse you can deviate by say 100 to 400 words (if you deem it necessary) give or take, but dont do so at the expense of the OBU expected requirements (see information pack) for each part.

Yes, your part 3 would include your analysis using pestel, swot and the ratios. Infact a typical part 3 would include, a pestel analysis & swot analysis (Business analysis) , ratios analysis (Financial analysis) , limitations of analysis (if any) and very importantly a conclusion section, which summarises your work by answering your research questions. It is possible to add more sections, depending on each students research direction.

I have read of a student passing with 5 ratios, I myself did only 8. Let your research questions guide your choice and number of ratios. It is the suitability and quality of the evaluation of each ratio that is most important.

Thank you for replying. Can you please tell me about this a bit more. Like you said that we can include limitations if there are any, in Part 3. But in Part 2 as well we have to include limitations of analysis. Why is that?

HI maryam20,

Question 1
if you are to follow the RAP research process to a t, it is expected that when you begin writing part 2, you should have collected and narrowed down your information (‘information gathering’) . Which in the case of topic 8 is done with secondary data such as annual reports of your company and comparator, online news report/articles etc.
There are two kinds of limitations you need for part 2

1st—while you were getting these information, think, what where the challenges you faced? did you have to pay for some info? Perhaps a method used to collect said information was not as efficient? etc. This will make up your limitations of information gathering.

2nd—when you explain the models and ratios you plan to use, like i described earlier (in earlier posts), you should also include a general texbook perspective explanation of their limitations.

For part 3
If you do a decent RAP you will most certainly encounter some ‘limitations in your analysis’, this in some part could be attributed to the fact that with topic 8 it is almost impossible to find a perfect comparator, as such certain issues will become apparent. A classic example is a significant difference in accounting policy that affects an Fs item which in turn affects a calculation of a financial ratio , which could affect its interpretation if the policy is not taken into account when a comparison is done.
You could also encounter a limitation as a result of the external environment, where perhaps the authorities over your organisations of choice are different in certain crucial areas that one has an economical advantage over the other.
Also, critically assess the information you are evaluating in this part, is it biased? to what extent? if so, what is the effect on your analysis, and ultimately your conclusion.

(see page 36 of the latest OBU information pack for the structure of the RAP)

Question 2
explain the theory of the model in a brief and simple way, such that an average educated reader who is not an accountant or in a similar field, can understand and refer back to it when in doubt, and reasonably follow your evaluation in part 3.

Note that PESTEL is a variation of the model PEST. and either is acceptable.

Okay thank you so much for replying.

I have another confusion.

There are two sections which we have to include in Part 2:

1) The sources of information from which you have obtained relevant data

In this one I can tell about each and every source even if I have not included it in the reference list right? for example can I even mention referencing articles from open tuition?

2) A description of the methods used to collect information, including online access

Here I have to give an explanation for primary and secondary data right? but what if I have not used primary data. Does that mean that I only give an explanation for secondary data?

Thanks in advance

Actually I am aiming to complete part 2 that is why I want to be sure that I am including the right things.

I have a doubt. In Part 2, when I am explaining ratio analysis and then its limitations. Do I have to include the explanation and limitations of all the ratios that I have used for my evaluation and analysis part?

@trephena Hi,

I am about to finalize my RAP but i have following two questions regarding RAP (Topic 8) submission:

1. In the RAP checklist point 2 mentioned that “All marking is now anonymous so please ensure you have you NOT included any mention of your name in any of the project documentation submitted”

Now my question is doest it ask to delete my name and only put the ACCA reg no in RR, SLS and Presentation files ?

2. Is that necessary to submit financial statements in pdf file? Since In my excel working I have inserted the financial statements of both main and comparator which I am going to submit anyway.

TIA

Can anyone please tell me the characteristics of a ”good conclusion”.

I have written the conclusion but I am not satisfied with it.