TÀI LIỆU ACCA MỚI NHẤT 2015 BPP p4 examkit

Paper P4 Advanced Financial Management This ACCA Study Text for Paper P4 Advanced Financial Management has been comprehensively reviewed by the ACCA examining team This review guarantees appropriate depth and breadth of content and comprehensive syllabus coverage For exams up to June 2015 BPP House 142-144 Uxbridge Road London W12 8AA United Kingdom T 0845 075 1100 (UK) T +44 (0)20 8740 2211 (Overseas) E Learningmedia@bpp.com bpp.com/learningmedia • A user-friendly format for easy navigation • Exam focus points describing what the examining team will want you to • Regular Fast Forward summaries emphasising the key points in each chapter • Questions and quick quizzes to test your understanding • A practice question bank containing exam- standard questions with answers • A full index • All you need in one book Study Text Contact us In addition to ACCA examining team reviewed material you get: Advanced Financial Management BPP Learning Media is dedicated to supporting aspiring business professionals with top-quality learning material as they study for demanding professional exams, often whilst working full time BPP Learning Media’s commitment to student success is shown by our record of quality, innovation and market leadership in paper-based and e-learning materials BPP Learning Media’s study materials are written by professionally qualified specialists who know from personal experience the importance of top-quality materials for exam success ACCA P4 ACCA approved content provider ACCA APPROVED CONTENT PROVIDER ACCA Approved Study Text Paper P4 Advanced Financial Management Study Text for exams up to June 2015 Free access to our Exam Success site Look inside June 2014 £32.00 ACP4ST14 (HO).indd 1-3 27/05/2014 17:44 S T U D Y PAPER P4 ADVANCED FINANCIAL MANAGEMENT BPP Learning Media is an ACCA Approved Learning Partner – content This means we work closely with ACCA to ensure this Study Text contains the information you need to pass your exam In this Study Text, which has been reviewed by the ACCA examination team, we:  Highlight the most important elements in the syllabus and the key skills you need  Signpost how each chapter links to the syllabus and the study guide  Provide lots of exam focus points demonstrating what is expected of you in the exam  Emphasise key points in regular fast forward summaries  Test your knowledge in quick quizzes  Examine your understanding in our practice question bank  Reference all the important topics in our full index BPP's Practice & Revision Kit, i-Pass and Interactive Passcard products also support this paper FOR EXAMS IN DECEMBER 2014 AND JUNE 2015 T E X T First edition 2007 Seventh edition May 2014 ISBN 9781 4727 1088 (Previous ISBN 9781 4453 9656 9) e-ISBN 9781 4453 6743 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of BPP Learning Media Ltd We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the practice answer bank have been prepared by BPP Learning Media Ltd, unless otherwise stated Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www.bpp.com/learningmedia Printed in the United Kingdom by Polestar Wheatons Hennock Road Marsh Barton Exeter EX2 8RP Your learning materials, published by BPP Learning Media Ltd, are printed on paper obtained from traceable sustainable sources © BPP Learning Media Ltd 2014 ii Contents Page Introduction Helping you to pass Studying P4 The exam paper and exam formulae v vii xi Part A Role and responsibility towards stakeholders 3a 3b 3c The role and responsibility of senior financial executive/advisor Financial strategy formulation Conflicting stakeholder interests Ethical issues in financial management Impact of environmental issues on corporate objectives and governance 29 69 95 103 Part B Economic environment for multinationals Trading and planning in a multinational environment 121 Part C Advanced investment appraisal 7a 7b Discounted cash flow techniques Application of option pricing theory in investment decisions Impact of financing on investment decisions and adjusted present values Valuation and the use of free cash flows International investment and financing decisions 159 187 205 259 277 Part D Acquisitions and mergers 10 11 12 Acquisitions and mergers versus other growth strategies Valuation of acquisitions and mergers Regulatory framework and processes Financing mergers and acquisitions 305 319 353 365 Part E Corporate reconstruction and reorganisation 13 14 Financial reconstruction Business reorganisation 379 393 Part F Treasury and advanced risk management techniques 15 16 17 18 The role of the treasury function in multinationals The use of financial derivatives to hedge against foreign exchange risk The use of financial derivatives to hedge against interest rate risk Dividend policy in multinationals and transfer pricing 409 427 477 513 Part G Emerging issues 19 Recent developments in world financial markets and international trade Appendix: Mathematical tables Practice question bank Practice answer bank Index Review form 529 553 559 587 655 Contents iii A note about copyright Dear Customer What does the little © mean and why does it matter? Your market-leading BPP books, course materials and elearning materials not write and update themselves People write them: on their own behalf or as employees of an organisation that invests in this activity Copyright law protects their livelihoods It does so by creating rights over the use of the content Breach of copyright is a form of theft – as well being a criminal offence in some jurisdictions, it is potentially a serious breach of professional ethics With current technology, things might seem a bit hazy but, basically, without the express permission of BPP Learning Media:  Photocopying our materials is a breach of copyright  Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to Facebook or emailing them to your friends is a breach of copyright You can, of course, sell your books, in the form in which you have bought them – once you have finished with them (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single user licence basis: we not supply ‘unlock’ codes to people who have bought them second hand And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website A tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting organisations that If they act illegally and unethically in one area, can you really trust them? iv Introduction Helping you to pass BPP Learning Media – Approved Learning Partner - content As ACCA’s Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use study materials reviewed by the ACCA examination team By incorporating the examination team’s comments and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media Study Text provides excellent, ACCA-approved support for your studies The PER alert Before you can qualify as an ACCA member, you not only have to pass all your exams but also fulfil a three year practical experience requirement (PER) To help you to recognise areas of the syllabus that you might be able to apply in the workplace to achieve different performance objectives, we have introduced the ‘PER alert’ feature You will find this feature throughout the Study Text to remind you that what you are learning to pass your ACCA exams is equally useful to the fulfilment of the PER requirement Your achievement of the PER should now be recorded in your on-line My Experience record Tackling studying Studying can be a daunting prospect, particularly when you have lots of other commitments The different features of the text, the purposes of which are explained fully on the Chapter features page, will help you whilst studying and improve your chances of exam success Developing exam awareness Our Texts are completely focused on helping you pass your exam Our advice on Studying P4 outlines the content of the paper, the necessary skills you are expected to be able to demonstrate and any brought forward knowledge you are expected to have Exam focus points are included within the chapters to highlight when and how specific topics were examined, or how they might be examined in the future Using the Syllabus and Study Guide You can find the syllabus and Study Guide on pages xiii – xxii of this Study Text Testing what you can Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can recall what you have learnt We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content Introduction v Chapter features Each chapter contains a number of helpful features to guide you through each topic Topic list Topic list Syllabus reference What you will be studying in this chapter and the relevant section numbers, together with ACCA syllabus references Introduction Puts the chapter content in the context of the syllabus as a whole Study Guide Links the chapter content with ACCA guidance Exam Guide Highlights how examinable the chapter content is likely to be and the ways in which it could be examined Knowledge brought forward from earlier studies What you are assumed to know from previous studies/exams FAST FORWARD Summarises the content of main chapter headings, allowing you to preview and review each section easily Examples Demonstrate how to apply key knowledge and techniques Key terms Definitions of important concepts that can often earn you easy marks in exams Exam focus points When and how specific topics were examined, or how they may be examined in the future Formula to learn Formulae that are not given in the exam but which have to be learnt Gives you a useful indication of syllabus areas that closely relate to performance objectives in your Practical Experience Requirement (PER) vi Introduction Question Gives you essential practice of techniques covered in the chapter Case Study Real world examples of theories and techniques Chapter Roundup A full list of the Fast Forwards included in the chapter, providing an easy source of review Quick Quiz A quick test of your knowledge of the main topics in the chapter Practice Question Bank Found at the back of the Study Text with more comprehensive chapter questions Cross referenced for easy navigation Studying P4 As the name suggests, this paper examines advanced financial management topics and is particularly suited to those who are thinking about a career in treasury or are likely to be involved in strategic financial management decisions What P4 is about The aim of the syllabus is to develop students’ ability to apply relevant knowledge and skills, and exercise the professional judgement expected of a senior financial advisor, in taking or recommending financial management decisions that are likely to have an impact on the entire organisation This is an advanced level optional paper which builds on the topics covered in Paper F9 Financial Management As an advanced paper it tests much more than just your ability to perform calculations You must be able to evaluate data, assess the potential financial and strategic consequences of taking investment decisions and advise on alternative courses of action, amongst other things, in both a domestic and international context The syllabus is divided into seven main sections: (a) The role and responsibility towards stakeholders More than ever, company management’s responsibility towards all stakeholders is under scrutiny They must be aware of different stakeholder groups’ conflicting needs and be able to develop suitable financial strategies that fulfil each group’s interests as much as possible The impact of environmental factors should also be uppermost in their minds given the increasing importance placed on such factors in the modern business world Ethical issues cannot be ignored – ethics are expected to be a consistent theme in the examination, with the examiner expecting students to be able to take a practical approach to identifying such issues in given scenarios (b) Economic environment for multinationals Multinational companies have their own unique set of challenges, including having operations in international locations You will be expected to have detailed knowledge and understanding of how to manage international finances and strategic business and financial planning for companies with international operations (c) Advanced investment appraisal This section revisits investment and financing decisions with the emphasis moving from straightforward technical knowledge towards the strategic issues associated with making investment decisions, both domestic and international (d) Acquisitions and mergers You will be expected to distinguish between different types of acquisitions, choose and apply the most appropriate method of valuation and make strategic decisions regarding how the merger or acquisition should be financed You will be required to act in an advisory as well as technical capacity (e) Corporate reconstruction and re-organisation This section looks at how to put together a restructuring package and ways in which an organisation might be re-organised (for example, management buyouts and sell-offs) As above, you will be expected to act in both a technical and advisory capacity in questions on this section Introduction vii (f) Treasury and advanced risk management techniques This section covers distinct areas of risk and how to measure and manage them Interest rate and currency risks and the derivatives used to hedge against them are considered in detail You will not only be required to know how the derivatives work but also to advise on the best methods of hedging in particular scenarios This section also covers other risks such as credit risk and additional treasury functions such as dividend policy (g) Emerging issues in finance and financial management Financial management is a continually developing area and finance executives have to keep up to date with the new tools and techniques that are emerging, as well as developments in the international financial markets Skills you have to demonstrate  Be able to integrate knowledge and understanding from across the syllabus  Think in a strategic way – you are assumed to be a senior financial adviser for the purposes of this paper  Be able to criticise financial techniques as well as apply them, and be able to make reasoned judgements and give objective advice based on calculated results  Be able to think internationally as well as from the viewpoint of the domestic market  If you read the main capabilities listed by ACCA that students are expected to have on completion of P4, you will find continued reference to the verbs ‘evaluate’, ‘assess’, ‘advise’ and ‘explain’ – make sure you can all of these in relation to the different aspects of the syllabus How to pass The examiner’s reports for both exams in 2013 highlighted factors on which students should focus viii Introduction  Study the entire syllabus Students who are well-prepared are much more likely to be successful than students who study at the last minute and rely on question spotting and hints  Apply knowledge and understanding to the scenario Weak answers tend to be more general  Provide a balanced answer to all parts of the question, whether discussion or calculation parts Scripts that answer all parts of all questions are more likely to pass than scripts that leave question parts or whole questions unanswered Students should make sure that they choose optional questions where they can answer all parts  Good time management is vitally important Students should avoid spending too long on individual questions  Answer the question set, all of the question set and no more Question requirements and narrative should be read carefully Irrelevant answers will not score well  Legible, well-presented and well-structured answers often score well The presentation of answers achieving high marks is normally good, with clear labelling and structure and workings Adopting these practices will also help students obtain the professional marks  Remember what the examiners’ reports say and emulate the approaches, techniques and good practice that they suggest  Do a quick check Do the numerical answers make sense?  Apply knowledge and understand Brought forward knowledge As mentioned previously, this paper builds on knowledge brought forward from Paper F9 Financial Management If you have not studied F9, you should be aware that the following topics are assumed knowledge and should be considered examinable            Management of working capital Business finance (including sources of finance and dividend policy) The capital structure decision Investment decisions Interest and discounting Investment appraisal Capital rationing Cost of capital (including CAPM and WACC) Business valuations Market efficiency Foreign currency and interest rate risk management Introduction ix Scrip issue, 49, 50 Secondary market, 411 Securitisation, 412 Security, 73 Sell-off, 397 Share capital and reserves, 38 Share exchange, 367 Share option scheme, 76 Share repurchases, 515 Shareholder conflict, 70, 71 Shareholders’ wealth, Short Put, 192 Short-term instruments, 413 Short-term pricing, 53, 65 Size economies of scale, 124 Smith report, 77 Soft capital rationing, 10 Sources of finance, 41 Spare debt capacity, 251 Specialisation, 130 Spin-off, 398 Spot exchange rate, 429 Spread, 430 Squeeze-out and sell-out rights, 357 Stakeholder, 22, 23 Connected, 22 External, 22 Internal, 22 Stakeholder conflict, 75 Stakeholder groups, 23 Stakeholder theory, 71 Stakeholders, 72, 80 Stakeholders' objectives, 70 Start-up investments, 125 Stock Exchange introduction, 52, 53 Stock Exchange requirements, 87 Stock splits, 49 Strategic financial management, 25 Strategic fund management, 20 Strategic management, 125 Strategic planning and control, 20 Strategic pricing, 55, 66 Strategy, 24 Subsidy, 252 Sukuk, 212 Supply chain security, 310 Surety bond, 235 Sustainability, 92, 104 Swap, 465 Swaptions, 498 Syndicated loan, 295 Synergy evaluation, 313 Synthetic foreign exchange agreements (SAFEs), 439 Synthetic forward, 439 Systematic risk, 60, 223 660 Index Tactical or management control, 20 Tactical planning, 20 Tactics, 20 Takeover bids, 368 Takeover Panel, 355 Target for acquisition, 311 Tariffs, 130, 145 Tax haven, 123 Tax havens, 123 Tax regime, 517 Tax shield, 249 Term currency, 429 Terminal value, 267 Terminal values, 267 Theta, 506 Tick value, 447 Ticks’, 447 Time to expiration, 194 Timing of dividend payments, 517 Tobin's 'q', 344, 345 Top-down planning, 43 TPK Holding, 18 Trade agreements, 129 Trade financing, 544 Traditional view of WACC, 241 Training programme, 150 Tranching, 536 Transaction cost economics, 75 Transaction costs, 412 Transaction exposure, 291 Transaction risk, 291 Transfer price, 518 Transfer price manipulation, 522 Transfer pricing, 123, 291, 518, 519 Translation risk, 291 Transparency, 80 Transparency Directive, 360 Treasury management function, 418 Trinity Mirror, 18 Triple bottom line (TBL) reporting, 110 Triple bottom line approach, 108 Turnbull committee, 77 Type I acquisition, 323, 324 Type II acquisition, 323, 333 Type III acquisition, 323 Unbundling, 396 Underwriting, 53 Ungeared betas, 223 Unsecured loan stock, 42 Unsubordinated debt, 239 Unsystematic risk, 60 Valuation (model) risk, 501 WACC, 339 Valuation models – beyond the CAPM, 45 Valuation models – the CAPM, 44 Valuation of high growth start-ups, 340 Valuation of type III acquisitions, 335 Value of American put options, 195 Value of European put options, 195 Vega, 506 Venture capital, 210, 401 Vertical mergers, 308 View of WACC, 241 Volatility of the underlying, 194 Weighted average cost of capital, 14 Whistleblowing, 90 White knights and white squires, 362 Window dressing, 316 World Bank, 136 World Trade Organisation (WTO), 134 Zero coupon bond, 42 Index 661 662 Index Notes Notes Notes Notes Notes Notes Notes Notes Notes Notes Review Form – Paper P4 Advanced Financial Management (6/14) Please help us to ensure that the ACCA learning materials we produce remain as accurate and user-friendly as possible We cannot promise to answer every submission we receive, but we promise that it will be read and taken into account when we update this Study Text Name: Address: During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) How have you used this Study Text? (Tick one box only) Home study (book only) On a course: college Our advertisement in ACCA Student Accountant With 'correspondence' package Our advertisement in Pass Other Our advertisement in PQ Our brochure with a letter through the post Why did you decide to purchase this Study Text? (Tick one box only) Our website www.bpp.com Which (if any) aspects of our advertising you find useful? (Tick as many boxes as are relevant) Have used BPP Texts in the past Recommendation by friend/colleague Recommendation by a lecturer at college Prices and publication dates of new editions Saw information on BPP website Information on Text content Saw advertising Facility to order books off-the-page Other None of the above Which BPP products have you used? Text Passcards Kit i-Pass Home Study Package Your ratings, comments and suggestions would be appreciated on the following areas Very useful Useful Not useful Good Adeqate Poor Yes No Introductory section Chapter introductions Key terms Quality of explanations Case studies and other examples Exam focus points Questions and answers in each chapter Fast forwards and chapter roundups Quick quizzes Question Bank Answer Bank Index Overall opinion of this Study Text Excellent Do you intend to continue using BPP products? On the reverse of this page is space for you to write your comments about our Study Text We welcome your feedback The BPP Learning Media ACCA Range Manager of this edition can be e-mailed at: pippariley@bpp.com Please return this form to: Pippa Riley, ACCA Range Manager, BPP Learning Media Ltd, FREEPOST, London, W12 8AA TELL US WHAT YOU THINK Please note any further comments and suggestions/errors below For example, was the text accurate, readable, concise, user-friendly and comprehensive? [...]... model 6 c = PaN(d1) – PeN(d2)e–rt In Pa /Pe  + (r + 0.5s )t 2 Where d1 = s t d2 = d 1 – s t 6 6 The put call parity relationship p = c – Pa + Pee–rt xii Introduction 16 Syllabus and Study Guide The P4 syllabus and study guide can be found below Introduction xiii xiv Introduction Introduction xv xvi Introduction Introduction xvii xviii Introduction Introduction xix xx Introduction Introduction xxi ...S T U D Y PAPER P4 ADVANCED FINANCIAL MANAGEMENT BPP Learning Media is an ACCA Approved Learning Partner – content This means we work closely with ACCA to ensure this Study Text... answer bank have been prepared by BPP Learning Media Ltd, unless otherwise stated Published by BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA www .bpp. com/learningmedia Printed in... pass BPP Learning Media – Approved Learning Partner - content As ACCA s Approved Learning Partner – content, BPP Learning Media gives you the opportunity to use study materials reviewed by the ACCA