F9 - Financial Management Practice and Revision Kit

401 Pages·2012·5.57 MB·English

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PAPER F9
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FINANCIAL MANAGEMENT
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BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content I
for the ACCA qualification. In this, the only Paper F9 Practice and Revision Kit to be
S
reviewed by the examiner:
 We discuss the best strategies for revising and taking your ACCA exams I
 We show you how to be well prepared for your exam
O
 We give you lots of great guidance on tackling questions
 We show you how you can build your own exams N
 We provide you with three mock exams including the December 2011 exam

 We provide the ACCA examiner's answers as well as our own to the June and December
2011 exams as an additional revision aid K
Our i-Pass product also supports this paper. I
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FOR EXAMS IN 2012
First edition 2007
Sixth edition January 2012
ISBN 9781 4453 7999 9
(previous ISBN 9780 7517 9407 6)
e-ISBN 9781 4453 2424 1
British Library Cataloguing-in-Publication Data
A catalogue record for this book All our rights reserved. No part of this publication may be
is available from the British Library reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior
Published by written permission of BPP Learning Media Ltd.
BPP Learning Media Ltd
BPP House, Aldine Place We are grateful to the Association of Chartered Certified
London W12 8AA Accountants for permission to reproduce past
examination questions. The suggested solutions in the
www.bpp.com/learningmedia exam answer bank have been prepared by BPP Learning
Media Ltd, except where otherwise stated.
Printed in the United Kingdom

©
Your learning materials, published by BPP Learning BPP Learning Media Ltd
Media Ltd, are printed on paper sourced from
2012
sustainable, managed forests.

ii
Contents
Page
Finding questions
Question index.................................................................................................................................................................iv
Topic index....................................................................................................................................................................viii

Helping you with your revision – the ONLY F9 Practice and
Revision Kit to be reviewed by the examiner!..............................................................
ix
Revising F9
Topics to revise.................................................................................................................................................................x
Question practice..............................................................................................................................................................x
Passing the F9 exam........................................................................................................................................................xi
Exam formulae...............................................................................................................................................................xiii
Formulae to learn...........................................................................................................................................................xiv
Exam information...........................................................................................................................................................xvi
Useful websites..............................................................................................................................................................xxi
Planning your question practice
BPP Learning Media's question plan............................................................................................................................xxii
Build your own exams...................................................................................................................................................xxvi
Questions and answers
Questions..........................................................................................................................................................................3
Answers..........................................................................................................................................................................67
Exam practice
Mock exam 1
 Questions............................................................................................................................................................277
 Plan of attack.......................................................................................................................................................283
 Answers...............................................................................................................................................................284
Mock exam 2
 Questions............................................................................................................................................................299
 Plan of attack.......................................................................................................................................................305
 Answers...............................................................................................................................................................306
Mock exam 3 (December 2011)
 Questions............................................................................................................................................................321
 Plan of attack.......................................................................................................................................................327
 Answers...............................................................................................................................................................328
ACCA examiner's answers
 June 2011............................................................................................................................................................341
 December 2011...................................................................................................................................................351

Mathematical tables
..........................................................................................................................................363
Review form
i ii
Question index
The headings in this checklist/index indicate the main topics of questions, but questions often cover several
different topics.
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 Page number
allocation
Marks Mins Question Answer

Part A: Financial management function

1 ABC Co 25 45 3 67
2 RZP Co (FMC, 6/05) 25 45 4 69

Part B: Financial management environment

3 Tagna (FMC, 6/03, amended) 25 45 5 71
4 Phoenix 25 45 6 73

Part C: Working capital management

5 East Meets West Co 25 45 8 76
6 JIT and EOQ 25 45 8 78
7 PNP Co (FMC, 6/07) 25 45 9 81
8 Thorne Co (FMC, 12/05) 25 45 10 83
9 Velm Co (FMC, 6/03) 25 45 10 86
10 PCB Co 25 45 11 89
11 Special Gift Suppliers (FMC, 12/01) 25 45 12 91
12 Ulnad Co (Pilot paper) 25 45 13 93
13 PKA Co (12/07) 25 45 14 96
14 FLG Co (6/08) 25 45 14 99
15 HGR Co (6/09) 25 45 15 102
16 APX Co (12/09) 25 45 16 106
17 ZSE Co (6/10) 25 45 17 109
18 WQZ Co (12/10) 25 45 18 112

Part D: Investment appraisal

19 Preparation question: Investment appraisal n/a n/a 19 114
20 Chromex Co 25 45 19 115
21 Preparation question: NPV with inflation and tax n/a n/a 20 118
22 Trecor Co (Pilot paper) 25 45 21 119
23 OKM Co (6/10) 25 45 21 121
24 CJ Co (12/10) 25 45 22 124
25 BRT Co (6/11) 25 45 23 127
26 Preparation question: Sensitivity analysis n/a n/a 24 130
27 Umunat Co (FMC, 12/04) 25 45 24 132
28 Duo Co (12/07) 25 45 25 134
29 SC Co (6/08) 25 45 25 137
iv Finding questions
Time Page number
allocation
Marks Mins Question Answer
30 Rupab Co (12/08) 25 45 26 141
31 PV Co (6/09) 25 45 27 144
32 AGD Co (FMC, 12/05) 25 45 27 147
33 Leaminger Co (FMC, 12/02) 25 45 28 150
34 ASOP Co (12/09) 25 45 29 152
35 Preparation question: Bread Products Co n/a n/a 29 156
36 Filtrex Co 25 45 30 158
37 Basril Co (FMC, 12/03) 25 45 31 160

Part E: Business finance

38 Tirwen Co (FMC, 12/04) 25 45 32 163
39 PG 25 45 33 165
40 Newsam Co 25 45 33 167
41 Arwin (FMC, 6/04) 25 45 35 171
42 Food retailers 25 45 36 173
43 CF Co 25 45 36 175
44 TFR Co (FMC, 6/07) 25 45 37 179
45 Echo Co (12/07) 25 45 38 182
46 JJG Co (6/09) 25 45 39 185
47 Nugfer Co (12/10) 25 45 40 188
48 YNM Co (6/11) 25 45 41 192

Part F: Cost of capital

49 D Co 25 45 42 194
50 IML Co 25 45 42 197
51 KJI 25 45 43 199
52 WEB Co 25 45 44 201
53 CAP Co 25 45 45 204
54 FAQ 25 45 45 207
55 Droxfol Co (Pilot paper) 25 45 46 209
56 Burse Co (6/08) 25 45 47 212
57 DD Co (12/09) 25 45 48 215
58 YGV Co (6/10) 25 45 49 218
59 NN Co (12/10) 25 45 50 221
60 AQR Co (6/11) 25 45 51 224

Finding questions v
Time Page number
allocation
Marks Mins Question Answer

Part G: Business valuations

61 MC 25 45 52 227
62 BST 25 45 53 230
63 Phobis Co (12/07) 25 45 54 233
64 THP Co (6/08) 25 45 54 237
65 Dartig Co (12/08) 25 45 55 240
66 KFP Co (6/09) 25 45 56 243
67 QSX Co (6/10) 25 45 57 246

Part H: Risk management

68 Marton Co 25 45 58 248
69 BS 25 45 59 251
70 Nedwen Co (Pilot paper) 25 45 60 253
71 Boluje Co (12/08) 25 45 60 256
72 NG Co (12/09) 25 45 61 259
73 ZPS Co (6/11) 25 45 62 262
74 Preparation question: Interest rates n/a n/a 63 265
75 Preparation question: QW n/a n/a 63 267
76 Gorwa Co (12/08) 25 45 64 269

Mock exam 1
Questions 77 to 80
Mock exam 2
Questions 81 to 84
Mock exam 3 (December 2011)
Questions 85 to 88
vi Finding questions
Planning your question practice
Our guidance from page xxii 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.
Using your BPP Learning Media products
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
You can purchase these products by visiting www.bpp.com/mybpp.

Finding questions v ii
Topic index
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.
Syllabus topic Question numbers
Asset replacement decisions 34, 35
Betas 50, 53, 54, 56, 57
Business valuation 61 – 67,
Capital rationing 33, 36, 37
CAPM 30, 49, 50, 53, 54
Cash management 8, 10, 12, 15, 43
Cash operating cycle 5, 7, 14
Competition policy 3, 20
Convertible loan notes 39, 40, 52, 63
Cost of capital 49, 52 – 60
Dividend policy 42, 45, 48, 57, 59
EOQ 6, 13, 14, 18
Exchange rate risk 7, 13, 68 – 73
Financial intermediaries 4, 16
Gearing 40, 41, 49, 55, 57, 58
Inflation 5, 21, 22, 23, 70
Interest rate risk 74, 75, 76
Interest rates 3, 74, 75, 76
Inventory management 6, 13, 18
Investment appraisal 19 – 37
IRR 19, 22, 28, 29, 31
Islamic finance 43
Leasing 32, 33, 34, 45
Managerial reward schemes 2, 65
NPV 19, 21 – 37
Objectives 1, 13, 17, 46, 48
Overtrading 10, 76
Payback 19, 20, 27, 31
Pecking order 54, 66, 71
Project-specific discount rate 24, 30, 54
Ratio analysis 1, 2, 4, 14, 20, 38 – 42, 44, 46, 51, 55
Receivables management 7, 9, 11, 13, 14, 15, 17, 68, 76
Rights issue 38, 39, 45, 46, 64, 65, 72
Risk and uncertainty 25, 27
Sensitivity analysis 26, 27, 28
Shareholder wealth maximisation 1, 3, 29, 46
SME's 43, 44
Sources of finance 38 – 48, 52, 58, 64, 71
Stock market efficiency 49, 50, 63, 64
Total shareholder return 1, 2, 67
Value for money 3
WACC 49, 41, 52, 53, 55, 56, 57, 58, 59, 60, 66
Working capital financing 5, 9, 10, 11, 12, 14, 15, 16, 32
Working capital management 5 – 18, 73

viii Finding questions
Helping you with your revision – the ONLY F9 Practice and
Revision Kit to be reviewed by the examiner!
BPP Learning Media – the sole Platinum Approved Learning Partner -
content
As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the unique
opportunity to use examiner-reviewed revision materials for the 2012 exams. By incorporating the examiner’s
comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision Kit
provides excellent, ACCA-approved support for your revision.
Tackling revision and the exam
You can significantly improve your chances of passing by tackling revision and the exam in the right ways. Our
advice is based on feedback from ACCA examiners.
 We look at the dos and don’ts of revising for, and taking, ACCA exams
 We focus on Paper F9; we discuss revising the syllabus, what to do (and what not to do) in the exam, how to
approach different types of question and ways of obtaining easy marks
Selecting questions
We provide signposts to help you plan your revision.
 A full question index
 A topic index listing all the questions that cover key topics, so that you can locate the questions that provide
practice on these topics, and see the different ways in which they might be examined
 BPP's question plan highlighting the most important questions and explaining why you should attempt
them
 Build your own exams, showing how you can practise questions in a series of exams
Making the most of question practice
At BPP Learning Media we realise that you need more than just questions and model answers to get the most from
your question practice.
 Our Top tips included for certain questions provide essential advice on tackling questions, presenting
answers and the key points that answers need to include
 We show you how you can pick up Easy marks on some questions, as we know that picking up all readily
available marks often can make the difference between passing and failing
 We include marking guides to show you what the examiner rewards
 We include examiners’ comments to show you where students struggled or performed well in the actual
exam
 We refer to the 2011 BPP Study Text (for exams in 2012) for detailed coverage of the topics covered in
questions
 In a bank at the end of this Kit we include the examiner's answers to the June and December 2011 papers.
Used in conjunction with our answers they provide an indication of all possible points that could be made,
issues that could be covered and approaches to adopt.
Revising F9 i x