OBU have announced the prescribed industry sectors for Period 39 and 40 for topics 8 & 15
The new Information Pack is also available on ACCA global. Please note that the revised Appendix 1 gives more detailed information about what is required in terms of the Assessment Criteria both to pass and for higher grades so is worth consulting
For the above topics and submission dates you MUST use organisations from the following specific sectors, based on the Industry Classification Benchmark (ICB):
The Industry Classification Benchmark is being updated with a new structure adopted on 1 July 2019. The codes used below are the new codes (the codes in the older version are given in brackets).
This link maps new codes to the older version of the definition of the sectors
https://www.ftserussell.com/files/support-document/current-new-icb-structuralconversion-map-detail
This is the link to the older version of the sectors
https://research.ftserussell.com/products/downloads/ICBStructure-Eng.pdf
1. 4010 Automobiles & Parts (3350 in older version) 4010020 Automobiles (3353 in older version) - Makers of motorcycles and passenger vehicles, including cars, sport utility vehicles (SUVs) and light trucks. Excludes makers of heavy trucks, which are classified under Commercial Vehicles & Trucks, and makers of recreational vehicles (RVs and ATVs), which are classified under Recreational Products
40101025 Auto parts (3355 in older version) - Manufacturers and distributors of new and replacement parts for motorcycles and automobiles, such as engines, carburetors and batteries. Excludes producers of tires, which are classified under Tires.
40101015 Tires (3357 in older version) - Manufacturers, distributors and retreaders of automobile, truck and motorcycle tires.
2. 4030 Media (5500 in older version) 40301010 and 40301035 Broadcasting & Entertainment (5553 in older version) - Producers, operators and broadcasters of radio, television, music and filmed entertainment. Excludes movie theatres, which are classified under Recreational Services.
40301020 Media agencies (5555 in older version) - Companies providing advertising, public relations and marketing services. Includes billboard providers and telemarketers.
40301030 Publishing (5557 in older version) - Publishers of information via printed or electronic media.
3. 502060 Industrial Transportation (2770 in older version) 50206010 Trucking (2779 in older version) - Companies that provide commercial trucking services. Excludes road and tunnel operators, which are classified under Transportation Services, and vehicle rental and taxi companies, which are classified under Travel & Tourism.
50206020 Railroads* (2775 in the older version) - Providers of industrial railway transportation and railway lines. Excludes passenger railway companies, which are classified under Travel & Tourism. (Topic 8 or 15 * see note below).
50206025 Railroad equipment (2753 in the older version)
50206030 Marine Transportation (2773 in the older version) - Providers of on-water transportation for commercial markets, such as container shipping. Excludes ports, which are classified under Transportation Services, and shipbuilders, which are classified under Commercial Vehicles & Trucks.
50206040 Delivery Services - Operators of mail and package delivery services for commercial and consumer use. Includes courier and logistic services primarily involving air transportation.
50206060 Transportation Services - Companies providing services to the Industrial Transportation sector, including companies that manage airports, train depots, roads, bridges, tunnels, ports, and providers of logistic services to shippers of goods. Includes companies that provide aircraft and vehicle maintenance services.
* if you are considering topic 8 or 15 please be aware that this sub-sector may be difficult as much infrastructure is publicly owned. There may not be sufficient information to support your analysis, or the accounts may be very complex.
Other Accountancy Qualifications
Topics 8 & 15 Period 39, 40 and 41
@jamesparekh when it comes to your submission you will need to include separate files for most components and there should be nothing in the report file after the conclusion and recommendations section
I will endeavour to answer queries on the Open Tuition forum but for 1-2-1 mentoring please see my website absolutementoring.uk
hi @GillianM,
can please shed some light on the fact do we have to include reference for each formula that we have used in calculating the ratios?
thanks
Hi @gillianm
Thanks for your quick response.
@gillianm I'm still confuse as there is suggested structure given in Information pack in which it clearly mentioned that
After the conclusion and recommendation
"you must also include:
A list of references
Appendices"
Hello.
Can someone please clarify me on the Analysis part on Part 3 with a comparator.
I'm using SWOT analysis and Porters Five Forces model for the business analysis part, but do I have to analyse both the selected organization, which includes the comparator?
Especially on SWOT analysis, I would have to conduct the analysis twice for both companies, which would take up a lot of word count.
I compared both companies on the financial analysis part.
Thank you
@theadiltaher as these formulae are ubiquitous and appear everywhere no reference is required (after all who can claim to be the originator of these - certainly not Kaplan, Frank Woods etc). However you must reference your limitations and ideas that you have gleaned from elsewhere to show from where you have extracted this information and data
Thanks @GillianM for the quick response.
i have asked about two points in my previous post, can you please shed some light on that post too?
Regards
Hi
1). It should be PESTEL first, then SWOT then ratio analysis.
2). Yes you can, you can put it in a separate section before the pestel, swot and ratios under the headings company profile, comparator profile, company description etc
You may also choose to put it along with your choice of company and reasons for choosing in earlier parts of the report.
3). There's no definite answer to this question , as it will depend on the authors choice and project objectives.
If for example your project objective was to " assess the financial strength of ABC" one could argue that an analysis of profitability, liquidity, gearing and efficiency ratios will all be beneficial to achieving this objective. Another author my instead choose to accomplish this objective by using only profitability and liquidity ratios backed by a strong critical swot analysis.
On the other if your objective was to "evaluate the profitability of ABC" , one can see how a strong analysis of only profitability ratios can successfully achieve this.
If you feel your words would be better spent on the business analysis, and your objectives will still be met, feel free to reduce your ratios.
I did only 6 and I passed.
A debt equity ratio is a 'type' of gearing ratio.
I've been finding it difficult to post, maybe due to some technical issues
4). True, ratios like current ratios are tricky to explain, in this case you may choose to use a part textbook approach, which is somewhat generic. However, be sure to add a supportive narrative from the business analysis and or an external source.
Hi
1). It should be PESTEL first, then SWOT then ratio analysis.
2). Yes you can, you can put it in a separate section before the pestel, swot and ratios under the headings company profile, comparator profile, company description etc
You may also choose to put it along with your choice of company and reasons for choosing in earlier parts of the report.
3). There's no definite answer to this question , as it will depend on the authors choice and project objectives.
If for example your project objective was to " assess the financial strength of ABC" one could argue that an analysis of profitability, liquidity, gearing and efficiency ratios will all be beneficial to achieving this objective. Another author my instead choose to accomplish this objective by using only profitability and liquidity ratios backed by a strong critical swot analysis.
On the other if your objective was to "evaluate the profitability of ABC" , one can see how a strong analysis of only profitability ratios can successfully achieve this.
If you feel your words would be better spent on the business analysis, and your objectives will still be met, feel free to reduce your ratios.
I did only 6 and I passed.
A debt equity ratio is a 'type' of gearing ratio.
4). True, ratios like current ratios are tricky to explain, in this case you may choose to use a part textbook approach, which is somewhat generic. However, be sure to add a supportive narrative from the business analysis and or an external source.
If you find that the current ratio is worsening, because of an increase in current liabilities like accounts payables, could this signal cashflow problems? linked to inept management ? Who are not responding appropriately to certain pestel issues?....
15 times is not too bad if it is used strategically, such as in places where the point that is being made is supported by external references or enhanced by your own criticisms.
5). Again, there is no definite answer here.
If you choose a suitable comparator, you will find that the pestel analysis will be very similar for both companies. There is not really a 'perfect' comparator in topic 8.
You want to be comparing and contrasting the different strategies of the companies against their results for a strong analysis. You will find that you may be focusing more on some areas than others, to help with this try and understand the strategic objectives and mission of the companies.
You will find that once you begin to enhance your analysis by juxtaposing the results of your company and its competitor, the latter's analysis will equally be better.
It is impossible for me to say whether your competitors analysis is satisfactory without seeing your rap.
As your markers comments have been open-ended, work on the fundamentals discussed in earlier posts to remove any doubts.
Help the marker , to help you pass.
Yes, submit all the documents that have been affected by your changes, including an extract of the financial statements that can be exported to a pdf from your excel sheet.
For your part 2 fail, apply the following guidelines
An explanation of the accounting and / or business techniques you have used, including a discussion of their limitations.
All business models/accounting techniques need to be clearly explained here (and referenced to source), and their limitations discussed, so the marker can see the student has a good understanding of them.
Hello @GillianM,
Do we need to provide sources as label in the graphs, table & charts while transferring them from excel to word? for e.g. to clear the examiner that the graphs presented in the word file are taken from the appendices prepared in excel.
Regards
you should either write 'Source' under the graph or diagram and give the name of the source and include it in your reference list or refer to the appendix and show the source there e.g. annual reports which should then be shown in the reference list
Hello @GillianM,
Thank you for your time, shall i just mention the web link in the reference list, or there is any specific format for e.g. Appendix, (2019). company name. available at (web link). (accessed on)?
waiting for your response.
Regards.
Hello, @GillianM.
1) i would like to ask that do we need to cite info each time if it is repeated? for e.g. info from pestel/swot repeated in the conclusion part.
2) do we need to provide reference each time if the information is taken from annaul reports or a single reference of annual report is fine?
waiting for your repsonse.
Regards
1) Normally as you should not be introducing new information in the Conclusion they should be little need to reference in the Conclusion
2) Referencing is important and therefore you are expected to show each time where you are extracting information for your statements or are using someone else's work or their opinion. So one blanket reference is not acceptable practice although where there is CONSECUTIVE use of the same source you may use the abbreviation (Ibid.) to show this. [Ibid is short for the Latin Ibidem and means 'in the same place']. However it does need to be 'appropriate' use: so the first time you might put (Annual Report 2018 p.20) and for the second reference (Ibid. p.49)
BTW I don't fully understand your previous query but it is not good practice to start references in the list with a weblink but they should be included as after 'Accesible at:...'
Thank you @GillianM, for your timely response i see that you have mentioned citation of the annual report as (Annual report 2018 p.20) but i have provided the annual report citation as (DHL, 2018, p.20) is it fine to use this format or may i use the format you suggested.
p.s i will be submitting my project in 2 days as i'm extremely busy and will be traveling, eagerly waiting for your response.
Regards
Yes that will be fined provided in your reference list you show it as DHL 2018. Do take a last minute look at the Open Tuition Ultimate Guide to Referencing your RAP that is on our homepage www.opentuition.com/obu for any last minute queries - the Golden Rules should be useful in this respect.
Thank you @GillianM, really appreciate your timely response. Edited the report and reference as per your guidance.
Best of luck for your future results.
Regards.
Sorry I don't fully understand your question - why can't you use Toyota (Pakistan ) and Nissan (Pakistan)? I am sure other students are using those two companies (where you live has nothing to do with the companies you may choose).
Hi @hanne58, @gillianm, @trephena
I will appreciate your guidance on the following:
I am currently working on Goodyear Tires with Cooper Tire as the comparator all in US.
1> Goodyear's products includes consumer tires, OEM tires, Tire for trucks and sales of tire related chemicals and Fleet services. The products and services offered by Cooper Tire is a subset of these and Goodyear is larger in terms of production capacity and revenue. The both operate majorly in the US market with regional presence in other countries/region. They both prepare their books with the same currency and accounting standard. ....Will Cooper tire still be a fair comparator considering the difference in size and product portfolio?
2> Cooper Tire uses the LIFO inventory system while Goodyear uses the FIFO system. will it be necessary to make adjusted of Cooper Tire inventory to conform to that of Goodyear?
3> Will it be necessary to include EPS, Dividend cover, share price growth and other ratios relating to return to shareholder in my ratio analysis?
4> There are speculations that Goodyear and Cooper Tire are working on a merger. I am working towards period 40 in may. and both companies have the 31 December Year End. Will this have any effect considering i will be working with the Financial statements for the years 2017, 2018 and 2019.
Thanks.
Hey msg4wale , thanks for including me among this forums great mentors.
I try my best.
1) you will find that this is an inherent drawback with this topic, it is very difficult to find perfectly matched companies. However, this does not have to be an issue. Close enough is good enough, its your depth of evaluation in acknowledging such weaknesses that counts. As you will be comparing in relative terms like percentages, size should not be an issue. Perhaps you may consider using the underdog as your main , as a change of perspective may make the evaluation more focused.
2) Interesting question.
The use of Lifo and fifo will much likely have a significant impact on key financial statement items. Depending on your project objectives, you can get around this without making adjustments (provided you include sufficient explanations). However, it would be best if you can do the painstaking work and make the adjustments, assuming you have sufficient information. You will most likely be rewarded for your efforts with a higher grade.
3) This depends on your research objectives, typically it is good to include at least one ratio from each category of financial ratios, profitability, efficiency, investor etc. However if you feel that your objectives would lead you to include more ratios on a category or exclude the category totally, then go ahead.
4) No.
If you research the reasons behind the possible merger, you may be able to gain insights that would strengthen your business analysis.
Thanks for the guidance @hanne58. I never thought of using the companies the other way round. I will look up more on cooper tire and see if i can gather enough information to make it suitable as the main company. Thanks for pointing it out.
@gillianm, @trephena I will love to hear your views too.
First I want to say a big thank you to Hanne for answering this query and making valuable contributions to this forum (especially as Topic 8 is not a topic I mentor for as personally I find it too frustrating finding comparators and all rather dull and boring). However I am making the following comments since I am asked to express my opinion.
1. I concur - you will rarely find a perfect match
2. You will need to explain when discussing ratios involving inventory that they use different bases and the potential impact of this on the figures and comparisons.
3' You need some investor and gearing type ratios
You should mention any impending merger or takeover as the two Boards of directors may be pursuing (and for the last couple of years may have been pursuing) strategies and made decisions in anticipation of this - and appreciation of strategies form an important part of Topic 8 analysis
Nothing much to add here except a few clarifications:
Unless the 2019 annual report is published by 1 Feb 2020 (unlikely) then you do not HAVE TO incorporate it in your findings (though you may choose to do so)
It will definitely strengthen your report if you look at strategies. Although it may not say so in the Information Pack it emphasises the importance of the business environment in the Resubmission Guide where the External Examiner suggests for a 'sound financial analysis' this should 'put the analysis in the context of the industry (or industries concerned, the relative risk of the industry, trends in the industry where appropriate and the impact of changes in the economic, political and regulatory environment. Due cognisance should be accorded to environmental factors and sustainability in arriving at conclusions and recommendations'
As hanne said: "If you research the reasons behind the possible merger, you may be able to gain insights that would strengthen your business analysis" So for example, if you have already done the SWOT for Goodyear and are contemplating changing Cooper to the main company then when you have done a SWOT for that, look for any synergies that would facilitate the merger or how a combined operation would build on their joint strengths and eliminate any of a particular company's weaknesses. You could then possibly comment briefly on this and the like, if not in the main findings where appropriate at least in your conclusions.
Thank you all @hanne58, @gillianm, @trephena, your responses. They are very helpful.
@gillianm @trephena
Greetings,
I am starting my RAP for May 2020 submission, intend to complete by end of January. For Topic 8 Automobile Manufacturers, Most of the companies have their year end at 31st December, Hence the latest Annual Reports available are of year ended 31 Dec 2018.
I wanted to ask that if I make my project using Annual reports of 2016, 2017 and 2018, will there be any issue of not using latest financial statements. This is because most of companies are also reporting on quarterly basis and might release quarter 4 accounts soon after year end although the Annual report might be issued later on.
I wanted your guidance that should I go on with these annual reports without worrying or will I have to alter the research later on after new financial results are released.
Thanks alot in advance for you time and consideration.
If you look at page page 16 of the Information Pack you will see that you are not compelled to use any annual reports that were released after 90 days before the submission window opens which works out at annual reports published before the beginning of February. It is unlikely that any company with a 31 December year end will have these in the public domain by that date and therefore using 31 December 2018 as the last of the 3 years is perfectly reasonable as these are in fact the 'latest' in accordance with the rules.
Quarterly reports are unaudited and therefore you are justified in sticking with the audited financial statements so 2016, 2017 and 2018 would be the usual statements to use. Students can however CHOOSE to go with financial statements that were published within the 90 days but there is no obligation to do so.
Hi GillianM, Trephena
I am planning to submit my RAP on period 40. I have chosen Tire for my project.
CEAT Limited is my chosen company and JK Tires and industries Limited is it's competitor.
Both Companies headquarters are in india. Their financial statements are prepared according to Accounting standards of Chartered Accountants of India. My concerns regarding these companies are as follows:
1. These companies fall under National Industrial Classification(NIC) code 22111- Manufacture of rubber tyres and tubes for Motor vehicles, Motorcycles, Scooters, three wheelers, tractors and aircrafts. Does this code fall under ICB's classification to Tire? Can I do my research project on these companies?
2.Both Companies have subsidiaries and associates so, I am going to use Standalone financial statements for both companies.
3.Tyre Products for both companies are similar. Both companies produces Tyres, tubes and flaps.Major revenue is from tyre so no segmental revenue recognition for Tubes and flaps.
4. Latest Share price for CEAT Limited is 1020 rs and 75.95 rs for jk tyres and industries Limited. Revenue is 782.05 crore difference but share price is such difference. So, does it affect for comparison?
Thank you and Regards
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