Acca P4 Dec 2007 Question Paper

Only available on StudyMode
  • Download(s) : 91
  • Published : May 25, 2013
Open Document
Text Preview
Professional Level – Options Module

Advanced Financial Management
Thursday 6 December 2007

Time allowed Reading and planning: Writing:

15 minutes 3 hours

This paper is divided into two sections: Section A – BOTH questions are compulsory and MUST be attempted Section B – TWO questions ONLY to be attempted Formulae tables are on pages 9–13. Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.

The Association of Chartered Certified Accountants

Paper P4

Section A – BOTH questions are compulsory and MUST be attempted 1 You are the chief financial officer of International Enterprises, a multinational company with interests in Europe and the Far East. You are concerned about certain aspects of the company’s financial management. The company has enjoyed a high rate of growth over the last three years as a result of a single product’s development. This product has had a big impact in the fast moving mobile communications industry. However, the company does not have any new products in development and is relying on expanding its market share and developing upgraded versions of the current product. As part of your preparation for the board meeting to discuss the 2007 draft accounts, you have prepared a projected income statement and balance sheet for the year ending 31 December 2008. These projections are based upon a number of agreed assumptions taken from the company’s strategic plan. As part of the agenda, the board will also consider its dividend target for the forthcoming year. International Enterprises Income statement for the year ended 31 December 2008 (projected) $m 288·1 143·2 –––––– 144·9 36·1 –––––– 108·8 1·8 –––––– 107·0 32·1 –––––– 74·9 –––––– 2008 (projected) $m 168·0 3·2 25·6 151·8 –––––– 180·6 –––––– 348·6 –––––– –––––– 2007 (draft) $m 261·9 132·6 –––––– 129·3 27·0 –––––– 102·3 2·3 –––––– 100·0 30·0 –––––– 70·0 –––––– 2007 (draft) $m 116·0 3·7 29·1 155·8 –––––– 188·6 –––––– 304·6 –––––– –––––– 2006 (actual) $m 220·0 104·0 –––––– 116·0 24·0 –––––– 92·0 2·3 –––––– 89·7 26·9 –––––– 62·8 –––––– 2006 (actual) $m 96·0 2·3 19·6 121·7 –––––– 143·6 –––––– 239·6 –––––– ––––––

Revenue Cost of sales Gross profit less other operating costs Operating profit Finance costs Profit before tax Income tax expense (at 30%) Profit for the period

Balance sheet as at 31 December

Non-current assets (see note) Buildings, plant and machinery Current assets Inventories Receivables Cash Total current assets Total assets Equity and liabilities Paid up share capital Ordinary shares (25c) Other reserves Retained earnings less dividends payable Total equity Balance sheet continued on the next page.

25·0 12·0 216·9 0·0 216·9 –––––– 253·9 ––––––

25·0 12·0 170·0 –28·0 142·0 –––––– 179·0 ––––––

20·0 10·0 120·0 –20·0 100·0 –––––– 130·0 ––––––

2

Balance sheet continued 2008 (projected) $m Current liabilities Trade payables Tax payable Dividends payable Interest payable Total current liabilities Non-current liabilities Loans Provisions (deferred tax) Total non-current liabilities Total liabilities Total equity and liabilities Note Non-current assets less accumulated depreciation Net book value of non-current assets 8·8 28·5 0·0 1·8 –––––– 39·1 –––––– 35·0 20·6 –––––– 55·6 –––––– 94·7 –––––– 348·6 –––––– –––––– 2008 $m 280·0 112·0 –––––– 168·0 –––––– 2007 (draft) $m 7·7 25·6 28·0 2·3 –––––– 63·6 –––––– 45·0 17·0 –––––– 62·0 –––––– 125·6 –––––– 304·6 –––––– –––––– 2007 $m 200·0 84·0 –––––– 116·0 –––––– 2006 (actual) $m 6·4 23·3 20·0 2·3 –––––– 52·0 –––––– 45·0 12·6 –––––– 57·6 –––––– 109·6 –––––– 239·6 –––––– –––––– 2006 $m 160·0 64·0 –––––– 96·0 ––––––

The projected figures assume: (i) $10 million of the existing loans will be repaid during the year. (ii) Capital investment in plant and...
tracking img