ACCAP3考试模拟真题答案.docx

1、ACCAP3考试模拟真题答案ACCAP3考试模拟真题答案点击查看原试题Tutorial note: the financial ratios given in the following analysis have been calculated using definitions specified in Accounting andFinance by Peter Atrill and Eddie McLaney. Correct, acceptable alternative ratio calculations will be given credit.1 (a) The follow

2、ing financial analysis focuses on the profitability and gearing of Hammond Shoes manufacturing division.Profitability: The effect of cheap imports appears to be reflected in the profitability of the company. Revenues and gross profithave both fallen significantly in the four years of data given in F

3、igure 1. In 2007 the company reported a gross profit marginof 235% and a net profit margin of 82%. This has declined steadily over the period under consideration. The figures for2009 were 200% and 47% and for 2011, 179% and 29% respectively. There has been a general failure to keep costsunder contro

4、l over this period. Sales have fallen by $150m in four years almost an 18% decrease. In contrast the cost ofsales has decreased by only $75m, a decrease of about 115%. This probably reflects the problem of reducing labour to reactto lower demand, particularly in a country where generous redundancy p

5、ayments are enforced by law and in an organisationwhich sees the employment of local labour as one of its objectives. The Return on Capital Employed (ROCE) has droppedsubstantially, from 2414% in 2007 to 645% in 2011.Gearing: The capital structure of the company has changed significantly in the last

6、 four years and this is probably of greatconcern to the family who are averse to risk and borrowing. Long-term borrowings have increased dramatically and retainedearnings are falling, reflecting higher dividends being taken by the family. Traditionally, the company has been very lowgeared, reflectin

7、g the social values of the family. The gearing ratio was only 69% in 2007, but has risen to over 225% in2011. During this period, retained profit has fallen and an increasing number of long-term loans have been taken out tofinance activities. Overall, gearing may still appear quite low and indeed th

8、is is probably the view of the senior managementof the company. However, the speed of these funding changes is a concern, particularly when trade receivables and tradepayables are considered.One of the values held by the family is the importance of paying suppliers on time. In Arnland, goods are nor

9、mally suppliedon 30 days credit. In 2007, Hammond Shoes, on average, exceeded this target, paying on 28 days. However by 2009 thisvalue had risen to 43 days and by 2011 to 63 days. During the same period, trade receivables, from the selected dataprovided, appear to have come down slightly (from 3865

10、 days in 2007 to 3650 days in 2011). It is difficult to escape theconclusion that Hammond Shoes is increasingly using suppliers as a source of free credit on top of the loans they have takenfrom the banks. Financing costs have risen significantly over the last four years, affecting profits and also

11、causing the interestcover ratio to fall dramatically from 14 to 133.The financial analysis essentially supports the descriptive analysis provided by the business analysts. Profits are falling, withthe firm unable to cut costs sufficiently quickly. The company is increasingly dependent on external fi

12、nance which is likely tocause disquiet amongst the owning family (on ethical grounds) and may concern suppliers.Investment analysis:The two scenarios developed by the senior managers also reflect the pessimism of the company. There seems to be universalacceptance that in the next three years the com

13、pany will still experience low sales even after the company invests in the newproduction facilities. Beyond that, managers only see a 30% chance of higher sales resulting and this depends uponfavourable changes in the business environment.For both scenarios, the net benefits of the first three years

14、 are $5m per year, giving a total of $15m.For the next three years, managers suggest that there is a 07 chance of continuing low demand, leading to net benefitsstaying at $5m per year, giving a further benefit of $15m total, with an expected value of $105 ($15m x 07). Higherdemand would lead to net

15、benefits of $10m per year, providing a total of $30m, but with an expected value of only $9m($30m x 03).Thus the expected benefits of the project are only $345 ($15m + $105m + $9m), which is below the proposed investmentof $375m. Only if the second scenario materialises after three years will the in

16、vestment (in broad terms) have been justified.This scenario would return $45m.However, it has to be recognised that the projection only covers the first six years of the new production facilities. The factorywas last updated twenty years ago and so it seems reasonable to expect net profits to contin

17、ue for many years after the sixyears explicitly considered in the scenario, but it must be recognised that predicting net benefits beyond that horizon becomesincreasingly unreliable and subjective.(b) This question does not require the candidate to use a specific framework for generating strategic o

18、ptions. A number ofpossibilities exist. The TOWS matrix, the strategy clock and the Ansoff matrix all come to mind. Each of these frameworks hassufficient facets to generate the number of options or directions required to gain the marks on offer. For the purpose of thisanswer, the TOWS matrix is use

19、d, because it fits so well with the SWOT analysis produced by the consultants. However, thefocus is on the options generated, not the framework itself and so other frameworks may be as appropriate.The TOWS matrix is a way of generating directions from an understanding of the organisations strategic

20、position. It buildsdirectly on the work of the SWOT with each quadrant identifying options that address a different combination of the internalfactors (strengths and weaknesses) and external factors (opportunities and threats).Taking each quadrant in turn:SO using strengths to take advantage of oppo

21、rtunities. A number of possible options might be considered here. HammondShoes retail expertise is an acknowledged strength of the company, and it may be possible to use it to take advantage of theopportunities provided by increased consumer spending and consumerism in Arnland. Two possible options

22、come to mind.Firstly, the company could consider selling competing products or complementary goods in its retail shops. This would giveconsumers a greater choice of products and allow Hammond Shoes to reap some of the profit margins enjoyed by itscompetitors. Given the companys acknowledged retail e

23、xpertise, this option should help preserve the long-term future of theshops.Secondly, the increasing appetite of the public for safe, car-free shopping from a variety of shops might suggest thedevelopment of retail villages on the land that Hammond Shoes have, both in Petatown and in the, now disuse

24、d, factory inthe north of the country. This option would combine the twin strengths of retail experience and the availability of land ownedby the company, to provide consumers with an experience they increasingly seek and value. The fact that only two sites areavailable in towns where there are curr

25、ently no Hammond Shoes retail shops means that there is no apparent reason whythe creation of the retail villages should not be combined with the diversification of the products offered in the retail stores.The software expertise of the companys information systems department can also be used to ful

26、fil consumers desire forincreased purchases over the Internet. Up to now this software expertise has been mainly used to develop in-house productionand retail systems which are acknowledged as being amongst the best in the industry. This expertise might be used to developan innovative e-commerce sit

27、e. This, of course, also opens up the possibility of sales outside Arnland, something that isunlikely at the moment, given that all the retail shops are within the country.WO options that take advantage of opportunities by overcoming weaknesses. To some extent this option contains theapproach sugges

28、ted by the Board, upgrading production machinery. This is addressing a known weakness (out-datedproduction facilities), simultaneously tackling another weakness, the cost of production. Here the approach is to reduce unitcost by improving productivity and reducing energy costs through the use of mod

29、ern production equipment. The Boardperceives that overcoming these weaknesses will allow the company to continue to compete in the market they are familiarwith.Reducing energy costs might also be used to appeal to the increasing number of green consumers of Arnland who take intoaccount ethical issue

30、s when making purchasing decisions. The business analysts have identified these savings as anopportunity in their SWOT analysis. They should be attracted to a product that has been produced using an energy efficientprocess, and has not travelled thousands of kilometres (using energy consuming boats,

31、 road transport and trains). At the timeof writing, there is an increased interest in measuring product miles or kilometres, a term used to assess the environmentalimpact of delivering a product from its point of production to its point of sale. Although the measures are controversial, thisneed not

32、necessarily concern the messages put out by Hammond Shoes marketing department.Hammond Shoes might also use the negative impact of television programmes showing the use of cheap and exploited labourin the production of goods in Orietaria as part of their marketing message. Although the consultants hav