*** September 2022 ACCA FM exam – Instant Poll and comments ***

No NPV no WAVC no buy or lease…

Got equivalent annual cost question for 2 machines

Anddd a working capital question about short term and long term finances, with a couple theory questions

Nothing like any of the mocks (I’ve done like 5)

Definitely didn’t get below 40% but was a hard exam

Yes I had this question. The question was about trade receivables not just receivables. I choose it retailer, this is because cinema, restaurant and supermarket won’t have trade receivables as they often gets money paid upfront before providing service or immediately after so there is no waiting time for cash to be collected.

I had the same paper as Zak97…
Section C was:
1. (i) Work out if the company should take the bulk purchase discount and comment on its financial acceptability.

(This was a classic – Work out EOQ, Work out total working capital costs, work out the new number of orders and the purchase price at the discount provided, before working out new total working capital costs, + give a comment if its worth it – this was 6 marks)

(ii) Work out the net benefit of the company changing its working capital financing policy, as well as the risks involved.

(Here you got presented with basically what looked like details that the company was using a Conservative approach. Then, the company decided to change how it funds its permanent and fluctuating assets, so that they were moving onto what looked like a more aggressive policy, and I worked it out that the net benefit was that aggressive was cheaper.
This is to be expected because aggressive policies are good for profitability but quite risky. So then that tied me in into the last part of the question where I commented on the risks presented by overdrafts- this was 4 marks)

(iii) Advise on two reasons (other than the financial ones previously analysed) that the company needs to consider before deciding if to take the discount.

(Unsure if this was correct, but I commented on the storage facilities becoming a problem if part of the deal is to order more units at a time, and how this could lead to increased costs if they will have to outsource storage potentially.
Second reason was, to assess whether the demand is going to change because if it will, unfavourably, the company will be left with surplus units from their increased order quantities that the discount deal demands – this was 4 marks, presumably 2 per reason)

Question 2.
(i) Calculate the equivalent annual costs of two machines and comment on which one the company should go for.

This was 14 marks!!

And, it was everything to do with NPV. You had to inflate operating costs and maintenance costs per each year the machine was running and then at the end, once NPV is calculated, it needed dividing by the annuity factor to get EAC.

(ii) Discuss why discounted cash flows are more superior than non discounted cash flows. This was 6 marks.
(And I ran out of time – but I was happy with the rest I’d done until here)

I was hoping for something like this to come up as I had seen them before in the Section C exam Kit from Kaplan so that was so, so, so useful.

HOWEVER!

Section A and B were both brutal.
In these exams, I sit and I read these multiple choice questions, and I can’t help but think: who on earth thinks up such Mad convoluted questions to make you question even the reason of your existence, NOT JUST question what they mean by the question. (?) Just crazy.

I absolutely despise how ACCA assess you in those sections. Full of traps and mind games, nothing else. Can’t wait to get to the strategics, where it is all written, where no one can rob me of marks.
I’d be interested to hear what the other paper was like, if anyone can share? Thanks guys and best of luck!

Section – A, Find out the equity beta of the Engineering company. What answer you’ll get?

Yes I had npv but ended up with positive. Have you calculated inflated contribution and fixed costs? Have you deducted TAD and put balancing figure in year 4?

1) what about sales volume for year 2-3-4? (70 % of 10,000)+ (30 % of 5000) ?

2) Second Section C question. how did you find equity market price for right issuing?

Did just like you. I have ended up with reduced sales volume for year 2 and 3 and calculated as (10000*.7)+(5000*.3)=8500

I think I ended up with option one equity, there is no interest cost and is less risky to business, to be honest I didn’t finished the last question fully as run out of time!!

DISASTER!

This exam was solid. I thought I was well prepared but I totally flunked mine.
Section a and b threw me.

Totally forgot how to calculate mv of a convertible. And I also had mv of a loan note to calculate. Can anyone explain how to do this, I didn’t have a clue?! Was it just the nominal value?

Also had a fx section b. Looked like data for a money market hedge but questions on foward exchange contract and forward rate agreement. Confused?!

I had section c questions on gearing I messed up as I did debt / debt + equity?

And the npv one which was difficult with the working capital and probabilities. I inflated the working capital by 3% each year, wrong?

I need a miracle!!

A hard exam! Section A had A LOT of questions where the examiner would like you to slip up.
I recall a question regarding conversion premium per share, luckily I had seen the other answers which were much smaller and made me rethink and realise it’s the net amount which is the premium. There was a question on NFP’s and TSR. The TSR question required careful reading as you needed to work out the initial share price. There was a question on equity beta. This was quick to do as the company was financed only through equity.

Section B was more difficult for me personally. The first section C question regarding the calculation of the interest cover and gearing ratio if one of the options is taken (Rights issue or Loan notes) – I struggled here and tried to get as many marks as possible along with the discussion afterwards. I made sure not to waffle but to show my knowledge and understanding. The NPV question was nice and the very last question was nice. I think I only made 3 valid points and accidentally mentioned sensitivity analysis which only measures uncertainty I believe.

A tough exam. I just hope I did enough!

I had the same question about the 2 things to consider before making a final decision and also wrote about storage costs.

Lots of questions about futures and options too

Also had the question about the 2 machines

I’m sure the tsr two marker was probably the only one I got right. Haha.

My npv one was debatable, I inflated from t1 ?
And not sure on the working capital requirement movement.

Pecking order theory a nice q. But my gearing one was bad, I totally messed all of that up.

That cost of capital one in section b was solid?!

And I totally forgot how to calculate conversion premium.

Equity beta I had but could not get that at all.
I thought it was an equity beta proxy so needed de and then regearing? But I couldn’t remember the calc!