2014 ACCA f9 revision kit BPP financial management

htt p:/ /f ree ac ca stu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ PAPER F9 dy m ate r FINANCIAL MANAGEMENT ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ as tu BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content for the ACCA qualification In this, the only Paper F9 Practice and Revision Kit to be reviewed by the examiner: We discuss the best strategies for revising and taking your ACCA exams  We show you how to be well prepared for your exam  We give you lots of great guidance on tackling questions  We show you how you can build your own exams  We provide you with three mock exams including the December 2012 exam  We provide the ACCA examiner's answers as well as our own to the June and December 2012 exams as an additional revision aid ac c  p:/ /f ree Our i-Pass product also supports this paper htt FOR EXAMS UP TO JUNE 2014 http://freeaccastudymaterial.blogspot.com/ P R A C T I C E & R E V I S I O N K I T ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ First edition 2007 Seventh edition January 2013 ISBN 9781 4453 6650 (previous ISBN 9781 4453 7999 9) ate r e-ISBN 9781 4453 6953 All our 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 dy m British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Published by www.bpp.com/learningmedia as tu BPP Learning Media Ltd BPP House, Aldine Place London W12 8AA We are grateful to the Association of Chartered Certified Accountants for permission to reproduce past examination questions The suggested solutions in the exam answer bank have been prepared by BPP Learning Media Ltd, except where otherwise stated Ricoh House Ullswater Crescent Coulsdon CR5 2HR ac c Printed in the United Kingdom by Ricoh htt ii p:/ /f ree Your learning materials, published by BPP Learning Media Ltd, are printed on paper sourced from sustainable, managed forests © BPP Learning Media Ltd 2013 http://freeaccastudymaterial.blogspot.com/ t.c om / http://freeaccastudymaterial.blogspot.com/ Contents Page Finding questions sp o Question index v Topic index viii log Helping you with your revision – the ONLY F9 Practice and Revision Kit to be reviewed by the examiner! x Revising F9 ial b Topics to revise xi Question practice xi Passing the F9 exam xii Exam formulae xiv Formulae to learn xv Exam information xvii Useful websites xxii Planning your question practice ate r BPP Learning Media's question plan xxiii Build your own exams xxvii Questions and answers dy m Questions Answers 71 Exam practice Mock exam  Questions 285  Plan of attack .291  Answers .292 as tu Mock exam  Questions 307  Plan of attack .313  Answers .314 ac c Mock exam (December 2012)  Questions 329  Plan of attack .335  Answers .336 ree ACCA examiner's answers  June 2012 351  December 2012 359 htt p:/ /f Mathematical tables 371 Review form iii http://freeaccastudymaterial.blogspot.com/ t.c om / http://freeaccastudymaterial.blogspot.com/ A note about copyright Dear Customer What does the little © mean and why does it matter? sp o Your market-leading BPP books, course materials and e-learning 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 as being a criminal offence in some jurisdictions, it is potentially a serious breach of professional ethics log 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 ial b  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 ate r 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? Using your BPP Learning Media products dy m This Kit gives you the question practice and guidance you need in the exam Our other products can also help you pass: Learning to Learn Accountancy gives further valuable advice on revision  Passcards provide you with clear topic summaries and exam tips  Success CDs help you revise on the move  i-Pass CDs offer tests of knowledge against the clock  Underlying knowledge CD offers guidance on assumed knowledge for Options papers P4, P5, P6, P7 as tu  Finding questions htt iv p:/ /f ree ac c You can purchase these products by visiting http://www.bpp.com/acca http://freeaccastudymaterial.blogspot.com/ t.c om / http://freeaccastudymaterial.blogspot.com/ Question index The headings in this checklist/index indicate the main topics of questions, but questions often cover several different topics Some questions set under the old syllabus Financial Management and Control (FMC) are included because their style and content are similar to those that appear in the Paper F9 exam Time sp o Marks allocation Mins ABC Co 25 RZP Co (FMC, 6/05) 25 Tagna (FMC, 6/03, amended) Phoenix JIT and EOQ Thorne Co (FMC, 12/05) Velm Co (FMC, 6/03) PCB Co Special Gift Suppliers (FMC, 12/01) dy m 10 Ulnad Co (Pilot paper) 11 PKA Co (12/07) 12 FLG Co (6/08) 13 HGR Co (6/09) 14 APX Co (12/09) as tu 15 ZSE Co (6/10) 16 WQZ Co (12/10) 17 Bold Co (12/11) 18 Wobnig Co (06/12) 71 45 73 25 45 75 25 45 77 25 45 80 25 45 82 25 45 84 25 45 10 87 25 45 11 89 25 45 12 91 25 45 13 94 25 45 13 97 25 45 14 100 25 45 15 104 25 45 16 107 25 45 17 110 25 45 18 112 25 45 19 115 n/a n/a 21 117 ate r Part C: Working capital management Answer 45 ial b Part B: Financial management environment Question log Part A: Financial management function Page number ac c Part D: Investment appraisal 19 Preparation question: Investment appraisal 25 45 21 118 21 Preparation question: NPV with inflation and tax n/a n/a 22 121 22 Trecor Co (Pilot paper) 25 45 23 122 23 OKM Co (6/10) 25 45 23 124 24 CJ Co (12/10) 25 45 24 127 25 BRT Co (6/11) 25 45 25 130 26 Preparation question: Sensitivity analysis n/a n/a 26 133 27 Umunat Co (FMC, 12/04) 25 45 26 135 28 Duo Co (12/07) 25 45 27 137 29 SC Co (6/08) 25 45 27 140 htt p:/ /f ree 20 Chromex Co Finding questions http://freeaccastudymaterial.blogspot.com/ v Time Question Answer 30 Rupab Co (12/08) 25 45 28 144 31 PV Co (6/09) 25 45 29 147 32 AGD Co (FMC, 12/05) 25 45 29 150 33 Leaminger Co (FMC, 12/02) 25 45 30 153 34 ASOP Co (12/09) 25 45 31 155 35 Preparation question: Bread Products Co n/a n/a 31 159 36 Filtrex Co 25 45 32 160 37 Warden Co (12/11) 25 45 32 163 38 Ridag Co (06/12) 25 45 33 165 39 Tirwen Co (FMC, 12/04) 40 Newsam Co 41 Arwin (FMC, 6/04) 42 Food retailers 43 CF Co 45 Echo Co (12/07) 46 JJG Co (6/09) 47 Nugfer Co (12/10) 48 YNM Co (6/11) dy m 49 Bar Co (12/11) Part F: Cost of capital 50 IML Co 51 KJI as tu 52 WEB Co 53 CAP Co 54 FAQ 55 Droxfol Co (Pilot paper) 58 YGV Co (6/10) 59 NN Co (12/10) 60 AQR Co (6/11) log 45 35 168 25 45 36 171 25 45 37 174 25 45 38 177 25 45 38 179 25 45 39 182 25 45 40 185 25 45 41 189 25 45 42 192 25 45 43 195 25 45 44 198 25 45 45 200 25 45 45 202 25 45 46 205 25 45 47 207 25 45 48 210 25 45 48 212 25 45 49 215 25 45 50 218 25 45 51 221 25 45 52 224 25 45 53 227 25 45 53 230 p:/ /f ree 61 Corhig Co (06/12) ac c 56 Burse Co (6/08) 57 DD Co (12/09) 25 ate r 44 TFR Co (FMC, 6/07) sp o allocation Mins ial b Page number Marks Part E: Business finance Finding questions htt vi t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ Time t.c om / http://freeaccastudymaterial.blogspot.com/ Page number Marks allocation Mins Question Answer 62 MC 25 45 55 232 63 BST 25 45 56 235 64 Phobis Co (12/07) 25 45 57 239 65 THP Co (6/08) 25 45 57 243 66 Dartig Co (12/08) 25 45 58 246 67 KFP Co (6/09) 25 45 59 249 68 QSX Co (6/10) 25 45 60 252 69 Close Co (12/11) 25 45 61 254 log ial b Part H: Risk management sp o Part G: Business valuations 70 BS 71 Nedwen Co (Pilot paper) 72 Boluje Co (12/08) 73 NG Co (12/09) 45 62 257 25 45 62 259 25 45 63 262 25 45 64 264 25 45 64 268 n/a n/a 65 270 n/a n/a 65 272 25 45 66 274 25 45 67 277 ate r 74 ZPS Co (6/11) 25 75 Preparation question: Interest rates 76 Preparation question: QW 77 Gorwa Co (12/08) dy m 78 Zigto Co (06/12) Mock exam Questions 79 to 82 Mock exam as tu Questions 83 to 86 Mock exam (December 2012) htt p:/ /f ree ac c Questions 87 to 90 Finding questions http://freeaccastudymaterial.blogspot.com/ vii Topic index t.c om / http://freeaccastudymaterial.blogspot.com/ Listed below are the key Paper F9 syllabus topics and the numbers of the questions in this Kit covering those topics If you need to concentrate your practice and revision on certain topics or if you want to attempt all available questions that refer to a particular subject, you will find this index useful sp o log ial b ate r dy m as tu Finding questions htt viii Question numbers 34, 35 50, 53, 54, 56, 57 62 – 69 33, 36 30, 50, 53, 54 6, 8, 10, 13, 43 12 3, 20 40, 52, 64 52 – 61 42, 45, 48, 57, 59 5, 11, 12, 16 11, 70 – 74 4, 14 40, 41, 55, 57, 58 21, 22, 23, 71 75, 76, 77 3, 75, 76, 77 5, 11, 16 19 – 38 19, 22, 28, 29, 31 43 32, 33, 34, 45 2, 66 19, 21 – 38 1, 11, 15, 46, 48 8, 77 19, 20, 27, 31 54, 67, 72 24, 30, 54 1, 2, 4, 12, 20, 39 – 42, 44, 46, 51, 55 7, 9, 11, 12, 13, 15, 77 39, 45, 46, 65, 66, 73 25, 27 26, 27, 28 1, 3, 29, 46 43, 44 39 – 48, 52, 58, 65, 72 50, 64, 65 1, 2, 68 41, 52, 53, 55, 56, 57, 58, 59, 60, 67 7, 8, 9, 10, 12, 13, 14, 32 – 18, 74 p:/ /f ree ac c Syllabus topic Asset replacement decisions Betas Business valuation Capital rationing CAPM Cash management Cash operating cycle Competition policy Convertible loan notes Cost of capital Dividend policy EOQ Exchange rate risk Financial intermediaries Gearing Inflation Interest rate risk Interest rates Inventory management Investment appraisal IRR Islamic finance Leasing Managerial reward schemes NPV Objectives Overtrading Payback Pecking order Project-specific discount rate Ratio analysis Receivables management Rights issue Risk and uncertainty Sensitivity analysis Shareholder wealth maximisation SME's Sources of finance Stock market efficiency Total shareholder return Value for money WACC Working capital financing Working capital management http://freeaccastudymaterial.blogspot.com/ t.c om / http://freeaccastudymaterial.blogspot.com/ Planning your question practice Our guidance from page xxiii shows you how to organise your question practice, either by attempting questions from each syllabus area or by building your own exams – tackling questions as a series of practice exams sp o June and December 2013 exams htt p:/ /f ree ac c as tu dy m ate r ial b log BPP’s answers for these exams will be available for free after the exams on http://www.bpp.com/acca Finding questions http://freeaccastudymaterial.blogspot.com/ ix htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Examiner’s answers: December 2012 http://freeaccastudymaterial.blogspot.com/ 365 Examiner’s answers: December 2012 htt 366 p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Examiner’s answers: December 2012 http://freeaccastudymaterial.blogspot.com/ 367 Examiner’s answers: December 2012 htt 368 p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu Mathematical tables 369 http://freeaccastudymaterial.blogspot.com/ htt 370 p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Mathematical tables http://freeaccastudymaterial.blogspot.com/ 371 Mathematical tables htt 372 p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ htt p:/ /f ree ac c as tu dy m ate r ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ Notes http://freeaccastudymaterial.blogspot.com/ t.c om / http://freeaccastudymaterial.blogspot.com/ Review Form – Paper F9 Financial Management (01/13) Name: Address: During the past six months you recall seeing/receiving any of the following? (Tick as many boxes as are relevant) sp o How have you used this Kit? (Tick one box only) Home study (book only) On a course: college Our advertisement in Student Accountant With 'correspondence' package Our advertisement in Pass Other Our advertisement in PQ log Our brochure with a letter through the post Why did you decide to purchase this Kit? (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 the complementary Study text ial b Have used other BPP products in the past Recommendation by friend/colleague Prices and publication dates of new editions Information on product content Saw advertising Facility to order books off-the-page Other None of the above Success CD Kit i-Learn Passcard i-Pass dy m Which BPP products have you used? Text ate r Recommendation by a lecturer at college Learn Online Home Study Package Home Study PLUS Your ratings, comments and suggestions would be appreciated on the following areas Passing F9 Useful Not useful Good Adequate Poor Yes No as tu Planning your question practice Very useful Questions Top Tips etc in answers Content and structure of answers ac c Mock exam answers Overall opinion of this Kit Excellent Do you intend to continue using BPP products? ree The BPP author of this edition can be e-mailed at: Yen-peiChen@bpp.com htt p:/ /f Please return this form to: Ian Blackmore, ACCA Publishing Manager (Fundamentals papers), BPP Learning Media Ltd, FREEPOST, London, W12 8BR http://freeaccastudymaterial.blogspot.com/ ... FINANCIAL MANAGEMENT FUNCTION Nature & purpose Objectives Stakeholders FINANCIAL MANAGEMENT ENVIRONMENT Economic environment Financial markets and institutions 1c WORKING CAPITAL MANAGEMENT Management... BPP Learning Media – the sole Platinum Approved Learning Partner content sp o Helping you with your revision – the ONLY F9 Practice and Revision Kit to be reviewed by the examiner! Tackling revision. ..PAPER F9 dy m ate r FINANCIAL MANAGEMENT ial b log sp o t.c om / http://freeaccastudymaterial.blogspot.com/ as tu BPP Learning Media is the sole ACCA Platinum Approved Learning