Question Tag: Efficiency

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FR – Mar 2025 – L2 – Q4 – Financial Statement Analysis

Compute adjusted financial ratios for 2022 and 2023, excluding business unit sale, and assess Ben Garzy LTD’s financial performance post-sale and IT system deployment.

Question

Ben Garzy LTD has recently undertaken significant strategic initiatives, including the sale of a key business unit and the implementation of a new information technology (IT) system aimed at enhancing operational efficiency.
Below are excerpts from the company’s most recent financial statements:

Income Statements for the Year ended 31 December

	2023 GH¢’000	2022 GH¢’000
Revenue	45,000	60,000
Cost of Sales	(27,000)	(36,000)
Gross Profit	18,000	24,000
Gain on Sale of Business Unit	2,000	–
Distribution Expenses	(4,000)	(6,000)
Administrative Costs	(5,500)	(3,800)
Finance Costs	(600)	(1,200)
Profit Before Tax	9,900	13,000
Tax Expense	(2,500)	(3,900)
Net Profit	7,400	9,100

Additional Information:

On 1 January 2023, Ben Garzy LTD completed the sale of a business unit for GH¢10 million, resulting in a gain of GH¢2 million. This sale was approved by shareholders, who received a special dividend of GH¢0.50 per share from the proceeds. The business unit’s financial performance included in the 2022 income statement was as follows:

Revenue: GH¢20,000
Cost of Sales: GH¢12,000
Gross Profit: GH¢8,000
Distribution Costs: GH¢1,500
Administrative Expenses: GH¢2,000
Profit Before Interest and Tax: GH¢4,500

During 2023, Ben Garzy LTD deployed an advanced IT system across its operations to enhance efficiency, reduce costs and improve financial reporting accuracy. This development is expected to influence the company’s financial metrics and operational outcomes.
The following financial ratios were calculated for Ben Garzy LTD for the year ended 31 December 2022:
Gross Profit Margin: 40.0%
Operating Profit Margin: 21.7%
Return on Capital Employed (ROCE): 44.38%
Net Asset Turnover: 2.73 times

Required:
a) Compute the comparable financial ratios for Ben Garzy LTD;
i) For the year ended 31 December 2022, excluding the financial contribution of the sold business unit.
(6 marks)
ii) For the year ended 31 December 2023, excluding the gain on the sale of the business unit.
(6 marks)
b) Assess the financial performance and position of Ben Garzy LTD as at 31 December 2023, taking into consideration the effects of the business unit sale and the implementation of the new IT system on the company’s operational efficiency and overall financial health.

Answer

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Tags: Business Unit Sale, Efficiency, Financial Performance, IT System Implementation, Net Asset Turnover, Profitability, Ratio Analysis, ROCE
Level: Level 2

Topic: Financial Statement Analysis
Series: MAR 2025

PSAF – Mar 2025 – L2 – Q3- Public sector fiscal planning and budgeting

Examine implications of Ghana's 2025-2028 fiscal policy proposals per PFM Act 2016.

Question

a) The Government has unveiled its transformative agenda, driven by its fiscal strategy, covering the period 2025 -2028. In the Agenda 2028 document released by the government, the following strategies were outlined:

Taxes on individual income (referred to as pay-as-you-earn) will be suspended until 2029.
Development will be driven by debt, with the government leveraging its goodwill to borrow from development partners and investors to fund its development programmers and projects. By the end of 2024, the debt-to-GDP ratio was projected to reach 80%.
There will be significant government expenditure aimed at boosting development and enhancing citizens’ living conditions. Data from 2024 indicate that the fiscal balance relative to GDP stands at 17%.
All forms of extravagance and wastefulness within the public sector will be eradicated to ensure efficiency, effectiveness, and value for money across all government operations.
The statement also noted that the government reserves the right to suspend the fiscal rules and targets as and when necessary.

Required:
i) Examine the implications of the government’s policy propositions (1 to 4) in relation to the principles of formulating and implementing fiscal policy objectives outlined in the Public Financial Management Act 2016, (Act 921).

ii) Discuss the steps and events that will necessitate a cabinet approval for a suspension of the fiscal rules and targets under the Public Financial Management Act 2016, (Act 921).

b) The Public Expenditure and Financial Accountability (PEFA) Framework is designed to evaluate the public financial management performance of public institutions. However, some critics, including the Director of Finance of your entity, argue that PEFA represents a form of neo-colonialism repackaged for Africa, and therefore, African countries should resist its assessment.

Required:
i) Explain to the Director of Finance FOUR reasons your country’s PFM system should be subjected to PEFA assessment.

ii) Discuss FOUR limitations of the PEFA framework used to assess PFM systems.

Answer

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Tags: Debt Management, Efficiency, Fiscal Policy, Government Expenditure, PFM Act, Public Financial Management, Tax suspension
Level: Level 2

Topic: Public expenditure and financial accountability framework
Series: MARCH 2025

FM – Mar 2025 – L2 – Q3 – Foreign exchange risk and currency risk management

Determine outcomes of forward contract and money market hedge for GPL's USD payment and recommend the best technique.

Question

a) Gyenyame Pharmaceuticals LTD (GPL), a Ghanaian company, imports raw materials from the United States of America to produce generic drugs for the local market. Due to recent fluctuations in the foreign exchange market, the company’s management is concerned about the impact of exchange rate movements on its costs and profitability.
The company is expected to pay USD750,000 in three months for a shipment of Active Pharmaceutical Ingredients (APIs). GPL also exports locally produced herbal medicine called ‘Koo-pile’ to the Ghanaian community in Oklahoma, USA on credit basis. The company is expecting a receipt of USD250,000 in three months for a consignment exported a month ago.
GPL is considering two hedging strategies to manage the foreign exchange risk: a forward contract and a money market hedge.
The following financial information is available:

Current Spot Rate (GHS/USD): 12.00
3-Month Forward Rate (GHS/USD): 12.20
3-Month USD Interest Rate: 3% per annum
3-Month GHS Interest Rate: 14% per annum
Expected Future Spot Rate in 3 Months (GHS/USD): 12.50

Required:
i) Determine the outcome of the two hedging techniques and recommend the appropriate technique to GPL based on your computations.
(9 marks)

ii) Explain THREE internal hedging techniques that GPL could use to manage its foreign exchange risk.

b) Technological advancements have significantly transformed financial markets, enhancing the way transactions are conducted, information is accessed and risks are managed. As financial institutions and individual investors increasingly depend on digital tools and innovative technologies, financial markets have become more efficient, accessible and transparent.

Required:
Explain FIVE positive impacts of technological development on financial markets.
(5 marks)

Answer

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Tags: Efficiency, Financial Markets, Risk Management, Technological advancements, Transparency
Level: Level 2

Topic: Financial markets
Series: MAR 2025

PSAF – Nov 2024 – L2 – Q4a – Financial Ratio Analysis

Compute financial ratios for Ghana Wind Farms LTD to analyze performance trends.

Question

Ghana Wind Farms LTD, a State-Owned Enterprise (SOE), has appointed a new Board of Directors in January 2023. The new Board, after settling for a year, is interested in assessing their performance for the year 2023 against the performance of the previous Board in the year 2022 through ratio analysis. Below is the financial statement of Ghana Wind Farms LTD for the two years.

Ghana Wind Farms LTD

Statement of Profit or Loss for the Year Ended 31 December 2023

	2023 (GH¢)	2022 (GH¢)
Revenue	9,860,000	6,218,000
Direct Cost	(5,905,000)	(5,822,000)
Gross Profit	3,955,000	396,000
Distribution Costs	(297,000)	(264,000)
Administrative Expenses	(505,000)	(455,000)
Other Income	236,000	13,000
Other Gains	–	1,482,000
Operating Profit	3,389,000	1,172,000
Finance Cost	(1,000,000)	(334,000)
Profit Before Tax Expense	2,389,000	838,000
Tax Expense	(500,000)	(144,000)
Profit After Tax	1,889,000	694,000

Ghana Wind Farms LTD

Statement of Financial Position as at 31 December 2023

	2023 (GH¢)	2022 (GH¢)
ASSETS
Non-Current Assets
Property, Plant & Equipment	17,000,000	15,000,000
Investment	5,000	2,000
Advances & Loans	–	30,000
Total Non-Current Assets	17,005,000	15,032,000
Current Assets
Inventories	687,000	546,000
Trade and Other Receivables	2,829,000	1,978,000
Prepayments	87,000	42,000
Cash and Cash Equivalents	383,000	434,000
Total Current Assets	3,986,000	3,000,000
TOTAL ASSETS	20,991,000	18,032,000
EQUITY & LIABILITIES
Equity
Government Equity	8,000	8,000
Other Government Equity	613,000	306,000
Capital Surplus	8,471,000	7,599,000
Income Surplus	(1,434,000)	478,000
Total Equity	7,970,000	8,697,000
Non-Current Liabilities
Deferred Credit	6,692,000	670,000
Deferred Tax Liabilities	2,498,000	2,572,000
Borrowings (Due After One Year)	1,297,000	950,000
Total Non-Current Liabilities	10,487,000	4,192,000
Current Liabilities
Bank Overdraft	166,000	180,000
Provision for Company Tax	109,000	109,000
Trade and Other Payables	1,820,000	4,516,000
Borrowings (Due Within One Year)	439,000	338,000
Total Current Liabilities	2,534,000	5,143,000
Total Liabilities	13,021,000	9,335,000
TOTAL EQUITY AND LIABILITIES	20,991,000	18,032,000

Required:

a) Compute the following ratios:

i) Current Ratio
ii) Quick Ratio
iii) Inventory Turnover (Days)
iv) Trade Receivable Collection Period (Days)
v) Trade Payables Period (Days)
vi) Working Capital Cycle
vii) Interest Cover Ratio
viii) Total Debt – Total Asset Ratio

Answer

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Tags: Efficiency, Financial Performance, Liquidity, Ratio Analysis, Solvency
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: Nov 2024

FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation

Calculation of key financial ratios for Nagbe LTD to compare with Suah LTD and evaluate financial performance.

Question

Dukuly LTD, a public entity, has been expanding through acquisitions. It is assessing two potential acquisition targets, Suah LTD and Nagbe LTD, which operate in the same industry. The indicative price for acquiring either entity is GH¢12 million.

The financial statements for Suah LTD and Nagbe LTD are provided as follows:

Statement of Profit or Loss for the year ended 30 September 2024

Item	Suah LTD (GH¢’000)	Nagbe LTD (GH¢’000)
Revenue	25,000	40,000
Cost of Sales	(19,000)	(32,800)
Gross Profit	6,000	7,200
Distribution & Admin Expenses	(1,250)	(2,300)
Finance Costs	(250)	(900)
Profit Before Tax	4,500	4,000
Income Tax Expense	(900)	(1,000)
Profit for the Year	3,600	3,000

Statement of Financial Position as at 30 September 2024

Item	Suah LTD (GH¢’000)	Nagbe LTD (GH¢’000)
Non-Current Assets	4,800	10,300
Current Assets	4,800	8,700
Total Assets	9,600	19,000
Equity	2,600	5,600
Non-Current Liabilities	5,000	9,200
Current Liabilities	2,000	4,200
Total Equity & Liabilities	9,600	19,000

Additional Information:

Carrying Amount of Plant Assets:
- Suah LTD: GH¢4,800,000
- Nagbe LTD: GH¢2,000,000

The following ratios for Suah LTD are provided:

Ratio	Suah LTD
Return on Capital Employed (ROCE)	62.5%
Net Asset Turnover	3.3 times
Gross Profit Margin	24.0%
Profit Margin (Before Interest & Tax)	19.0%
Current Ratio	2.4:1
Inventory Holding Period	31 days
Trade Receivables Collection Period	31 days
Trade Payables Payment Period	24 days
Gearing Ratio	65.80%
Acid Test Ratio	1.6:1

Required:
Using the financial statements provided, calculate the corresponding ratios for Nagbe LTD to compare with Suah LTD.

Answer

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Tags: Efficiency, Financial Statement Interpretation, Gearing, Investment Decision, Liquidity, Profitability, Ratio Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)

Explains the components of Value for Money (VFM) in the public sector.

Question

Value for Money (VFM)
Value for Money (VFM) is an objective that can be applied to any organization whose main objective is non-financial but has restrictions on the amount of finance available for spending, which the public sector is no exception.

Required:
Explain the components of VFM.

Answer

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Tags: Economy, Effectiveness, Efficiency, Public Sector, Value for Money
Level: Level 1

Topic: Cost-Volume-Profit (CVP) Analysis
Series: Nov 2024

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Question

Real Expansion Plc is a large group that seeks to grow by acquisition. The directors have identified two potential entities and obtained copies of their financial statements. The accountant of the company computed key ratios to evaluate the performance of these companies relating to:

Profitability and returns;
Efficiency in the use of assets;
Corporate leverage; and
Investor-based decisions.

The computation generated hot arguments among the directors, and they decided to engage a Consultant to provide expert advice on which company to acquire.

Extracts from these financial statements are given below:

Required:

(a) As the Consultant to the company, carry out a financial analysis on the financial statements and advise the company appropriately. (15 Marks)

(b) State the major limitations of ratio analysis for performance evaluation. (5 Marks)

Answer

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Tags: Efficiency, Financial Ratios, Investor decision, Leverage, Performance Evaluation, Profitability
Level: Level 3

Topic: Emerging Trends in Corporate Reporting

CR – May 2019 – L3 – Q2 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Assess the accounting treatment of a policy change and analyze the profitability, liquidity, and efficiency ratios of the company based on the financial statements.

Question

Below is the draft financial statement of Lanwani Plc., a manufacturer of fast-moving consumer goods.

Statement of financial position as at

Statement of profit or loss

Additional Information:

The company changed its accounting policy from the cost model to the revaluation model for its property. The revaluation reserve represents the revaluation surplus recognized in 2017. No adjustment was made for 2016.
Development costs of ₦45 billion were capitalized during 2017. The related asset is not expected to generate economic benefits until 2020.

Required:
a. Assess the accounting treatment of the change in accounting policy and state the impact on the return on capital employed (ROCE). (3 Marks)
b. Analyze the profitability, liquidity, and efficiency of Lanwani Plc. (15 Marks)
c. Briefly discuss TWO limitations of the analysis done in (b) above. (2 Marks)

Answer

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Tags: Accounting Policy Change, Efficiency, Liquidity, Profitability, Ratio Analysis, Revaluation
Level: Level 3

Topic: Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

AAA – Nov 2012 – L3 – AII – Q3 – Public Sector Audits

Defines an audit focused on assessing the relationship between service value and resources used.

Question

Defines an audit focused on assessing the relationship between service value and resources used.

Answer

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Tags: Efficiency, Public Sector Audits, Resource Allocation, Service Evaluation, Value for Money Audit
Level: Level 3

Topic: Public sector audit
Series: NOV 2012

PSAF – May 2018 – L2 – Q4 – Public Sector Audit

Explain the concept of Value-for-Money audit, its components, steps, and factors contributing to an effective VFM audit.

Question

In relation to public sector audit:

a. Define ‘Value-for-Money’ (VFM) audit. (2½ Marks)

b. Identify and explain THREE major components of ‘Value-for-Money’ audit. (6 Marks)

c. Explain FIVE steps towards a successful ‘Value-for-Money’ audit. (2½ Marks)

d. Identify FIVE factors which contribute to an effective ‘Value-for-Money’ audit. (5 Marks)

e. Explain the precise roles of the internal audit unit in relation to ‘Value-for-Money’ audit of a Government Business Entity (GBE). (4 Marks)

Answer

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Tags: Audit, Economy, Effectiveness, Efficiency, Value for Money
Level: Level 2

Topic: Public sector audit

FR – Mar 2025 – L2 – Q4 – Financial Statement Analysis

Compute adjusted financial ratios for 2022 and 2023, excluding business unit sale, and assess Ben Garzy LTD’s financial performance post-sale and IT system deployment.

Question

Income Statements for the Year ended 31 December

	2023 GH¢’000	2022 GH¢’000
Revenue	45,000	60,000
Cost of Sales	(27,000)	(36,000)
Gross Profit	18,000	24,000
Gain on Sale of Business Unit	2,000	–
Distribution Expenses	(4,000)	(6,000)
Administrative Costs	(5,500)	(3,800)
Finance Costs	(600)	(1,200)
Profit Before Tax	9,900	13,000
Tax Expense	(2,500)	(3,900)
Net Profit	7,400	9,100

Additional Information:

On 1 January 2023, Ben Garzy LTD completed the sale of a business unit for GH¢10 million, resulting in a gain of GH¢2 million. This sale was approved by shareholders, who received a special dividend of GH¢0.50 per share from the proceeds. The business unit’s financial performance included in the 2022 income statement was as follows:

Revenue: GH¢20,000
Cost of Sales: GH¢12,000
Gross Profit: GH¢8,000
Distribution Costs: GH¢1,500
Administrative Expenses: GH¢2,000
Profit Before Interest and Tax: GH¢4,500

During 2023, Ben Garzy LTD deployed an advanced IT system across its operations to enhance efficiency, reduce costs and improve financial reporting accuracy. This development is expected to influence the company’s financial metrics and operational outcomes.
The following financial ratios were calculated for Ben Garzy LTD for the year ended 31 December 2022:
Gross Profit Margin: 40.0%
Operating Profit Margin: 21.7%
Return on Capital Employed (ROCE): 44.38%
Net Asset Turnover: 2.73 times

Answer

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Tags: Business Unit Sale, Efficiency, Financial Performance, IT System Implementation, Net Asset Turnover, Profitability, Ratio Analysis, ROCE
Level: Level 2

Topic: Financial Statement Analysis
Series: MAR 2025

PSAF – Mar 2025 – L2 – Q3- Public sector fiscal planning and budgeting

Examine implications of Ghana's 2025-2028 fiscal policy proposals per PFM Act 2016.

Question

Taxes on individual income (referred to as pay-as-you-earn) will be suspended until 2029.
Development will be driven by debt, with the government leveraging its goodwill to borrow from development partners and investors to fund its development programmers and projects. By the end of 2024, the debt-to-GDP ratio was projected to reach 80%.
There will be significant government expenditure aimed at boosting development and enhancing citizens’ living conditions. Data from 2024 indicate that the fiscal balance relative to GDP stands at 17%.
All forms of extravagance and wastefulness within the public sector will be eradicated to ensure efficiency, effectiveness, and value for money across all government operations.
The statement also noted that the government reserves the right to suspend the fiscal rules and targets as and when necessary.

ii) Discuss the steps and events that will necessitate a cabinet approval for a suspension of the fiscal rules and targets under the Public Financial Management Act 2016, (Act 921).

Required:
i) Explain to the Director of Finance FOUR reasons your country’s PFM system should be subjected to PEFA assessment.

ii) Discuss FOUR limitations of the PEFA framework used to assess PFM systems.

Answer

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Tags: Debt Management, Efficiency, Fiscal Policy, Government Expenditure, PFM Act, Public Financial Management, Tax suspension
Level: Level 2

Topic: Public expenditure and financial accountability framework
Series: MARCH 2025

FM – Mar 2025 – L2 – Q3 – Foreign exchange risk and currency risk management

Determine outcomes of forward contract and money market hedge for GPL's USD payment and recommend the best technique.

Question

Current Spot Rate (GHS/USD): 12.00
3-Month Forward Rate (GHS/USD): 12.20
3-Month USD Interest Rate: 3% per annum
3-Month GHS Interest Rate: 14% per annum
Expected Future Spot Rate in 3 Months (GHS/USD): 12.50

Required:
i) Determine the outcome of the two hedging techniques and recommend the appropriate technique to GPL based on your computations.
(9 marks)

ii) Explain THREE internal hedging techniques that GPL could use to manage its foreign exchange risk.

Required:
Explain FIVE positive impacts of technological development on financial markets.
(5 marks)

Answer

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Tags: Efficiency, Financial Markets, Risk Management, Technological advancements, Transparency
Level: Level 2

Topic: Financial markets
Series: MAR 2025

PSAF – Nov 2024 – L2 – Q4a – Financial Ratio Analysis

Compute financial ratios for Ghana Wind Farms LTD to analyze performance trends.

Question

Ghana Wind Farms LTD

Statement of Profit or Loss for the Year Ended 31 December 2023

	2023 (GH¢)	2022 (GH¢)
Revenue	9,860,000	6,218,000
Direct Cost	(5,905,000)	(5,822,000)
Gross Profit	3,955,000	396,000
Distribution Costs	(297,000)	(264,000)
Administrative Expenses	(505,000)	(455,000)
Other Income	236,000	13,000
Other Gains	–	1,482,000
Operating Profit	3,389,000	1,172,000
Finance Cost	(1,000,000)	(334,000)
Profit Before Tax Expense	2,389,000	838,000
Tax Expense	(500,000)	(144,000)
Profit After Tax	1,889,000	694,000

Ghana Wind Farms LTD

Statement of Financial Position as at 31 December 2023

	2023 (GH¢)	2022 (GH¢)
ASSETS
Non-Current Assets
Property, Plant & Equipment	17,000,000	15,000,000
Investment	5,000	2,000
Advances & Loans	–	30,000
Total Non-Current Assets	17,005,000	15,032,000
Current Assets
Inventories	687,000	546,000
Trade and Other Receivables	2,829,000	1,978,000
Prepayments	87,000	42,000
Cash and Cash Equivalents	383,000	434,000
Total Current Assets	3,986,000	3,000,000
TOTAL ASSETS	20,991,000	18,032,000
EQUITY & LIABILITIES
Equity
Government Equity	8,000	8,000
Other Government Equity	613,000	306,000
Capital Surplus	8,471,000	7,599,000
Income Surplus	(1,434,000)	478,000
Total Equity	7,970,000	8,697,000
Non-Current Liabilities
Deferred Credit	6,692,000	670,000
Deferred Tax Liabilities	2,498,000	2,572,000
Borrowings (Due After One Year)	1,297,000	950,000
Total Non-Current Liabilities	10,487,000	4,192,000
Current Liabilities
Bank Overdraft	166,000	180,000
Provision for Company Tax	109,000	109,000
Trade and Other Payables	1,820,000	4,516,000
Borrowings (Due Within One Year)	439,000	338,000
Total Current Liabilities	2,534,000	5,143,000
Total Liabilities	13,021,000	9,335,000
TOTAL EQUITY AND LIABILITIES	20,991,000	18,032,000

Required:

a) Compute the following ratios:

Answer

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Tags: Efficiency, Financial Performance, Liquidity, Ratio Analysis, Solvency
Level: Level 2

Topic: Financial Statements Discussion and Analysis
Series: Nov 2024

FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation

Calculation of key financial ratios for Nagbe LTD to compare with Suah LTD and evaluate financial performance.

Question

The financial statements for Suah LTD and Nagbe LTD are provided as follows:

Statement of Profit or Loss for the year ended 30 September 2024

Item	Suah LTD (GH¢’000)	Nagbe LTD (GH¢’000)
Revenue	25,000	40,000
Cost of Sales	(19,000)	(32,800)
Gross Profit	6,000	7,200
Distribution & Admin Expenses	(1,250)	(2,300)
Finance Costs	(250)	(900)
Profit Before Tax	4,500	4,000
Income Tax Expense	(900)	(1,000)
Profit for the Year	3,600	3,000

Statement of Financial Position as at 30 September 2024

Item	Suah LTD (GH¢’000)	Nagbe LTD (GH¢’000)
Non-Current Assets	4,800	10,300
Current Assets	4,800	8,700
Total Assets	9,600	19,000
Equity	2,600	5,600
Non-Current Liabilities	5,000	9,200
Current Liabilities	2,000	4,200
Total Equity & Liabilities	9,600	19,000

Additional Information:

Carrying Amount of Plant Assets:
- Suah LTD: GH¢4,800,000
- Nagbe LTD: GH¢2,000,000

The following ratios for Suah LTD are provided:

Ratio	Suah LTD
Return on Capital Employed (ROCE)	62.5%
Net Asset Turnover	3.3 times
Gross Profit Margin	24.0%
Profit Margin (Before Interest & Tax)	19.0%
Current Ratio	2.4:1
Inventory Holding Period	31 days
Trade Receivables Collection Period	31 days
Trade Payables Payment Period	24 days
Gearing Ratio	65.80%
Acid Test Ratio	1.6:1

Required:
Using the financial statements provided, calculate the corresponding ratios for Nagbe LTD to compare with Suah LTD.

Answer

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Tags: Efficiency, Financial Statement Interpretation, Gearing, Investment Decision, Liquidity, Profitability, Ratio Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: Nov 2024

ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)

Explains the components of Value for Money (VFM) in the public sector.

Question

Required:
Explain the components of VFM.

Answer

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Tags: Economy, Effectiveness, Efficiency, Public Sector, Value for Money
Level: Level 1

Topic: Cost-Volume-Profit (CVP) Analysis
Series: Nov 2024

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Question

Profitability and returns;
Efficiency in the use of assets;
Corporate leverage; and
Investor-based decisions.

The computation generated hot arguments among the directors, and they decided to engage a Consultant to provide expert advice on which company to acquire.

Extracts from these financial statements are given below:

Required:

(a) As the Consultant to the company, carry out a financial analysis on the financial statements and advise the company appropriately. (15 Marks)

(b) State the major limitations of ratio analysis for performance evaluation. (5 Marks)

Answer

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Tags: Efficiency, Financial Ratios, Investor decision, Leverage, Performance Evaluation, Profitability
Level: Level 3

Topic: Emerging Trends in Corporate Reporting

CR – May 2019 – L3 – Q2 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Assess the accounting treatment of a policy change and analyze the profitability, liquidity, and efficiency ratios of the company based on the financial statements.

Question

Below is the draft financial statement of Lanwani Plc., a manufacturer of fast-moving consumer goods.

Statement of financial position as at

Statement of profit or loss

Additional Information:

The company changed its accounting policy from the cost model to the revaluation model for its property. The revaluation reserve represents the revaluation surplus recognized in 2017. No adjustment was made for 2016.
Development costs of ₦45 billion were capitalized during 2017. The related asset is not expected to generate economic benefits until 2020.

Answer

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Tags: Accounting Policy Change, Efficiency, Liquidity, Profitability, Ratio Analysis, Revaluation
Level: Level 3

Topic: Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

AAA – Nov 2012 – L3 – AII – Q3 – Public Sector Audits

Defines an audit focused on assessing the relationship between service value and resources used.

Question

Defines an audit focused on assessing the relationship between service value and resources used.

Answer

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Tags: Efficiency, Public Sector Audits, Resource Allocation, Service Evaluation, Value for Money Audit
Level: Level 3

Topic: Public sector audit
Series: NOV 2012

PSAF – May 2018 – L2 – Q4 – Public Sector Audit

Explain the concept of Value-for-Money audit, its components, steps, and factors contributing to an effective VFM audit.

Question

In relation to public sector audit:

a. Define ‘Value-for-Money’ (VFM) audit. (2½ Marks)

b. Identify and explain THREE major components of ‘Value-for-Money’ audit. (6 Marks)

c. Explain FIVE steps towards a successful ‘Value-for-Money’ audit. (2½ Marks)

d. Identify FIVE factors which contribute to an effective ‘Value-for-Money’ audit. (5 Marks)

e. Explain the precise roles of the internal audit unit in relation to ‘Value-for-Money’ audit of a Government Business Entity (GBE). (4 Marks)

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Find Related Questions by Tags, levels, etc.

Tags: Audit, Economy, Effectiveness, Efficiency, Value for Money
Level: Level 2

Topic: Public sector audit

Question Tag: Efficiency

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Ghana Wind Farms LTD

Statement of Financial Position as at 31 December 2023

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Statement of Profit or Loss for the year ended 30 September 2024

Statement of Financial Position as at 30 September 2024

Additional Information:

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Explains the components of Value for Money (VFM) in the public sector.

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CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

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Assess the accounting treatment of a policy change and analyze the profitability, liquidity, and efficiency ratios of the company based on the financial statements.

Additional Information:

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Defines an audit focused on assessing the relationship between service value and resources used.

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PSAF – May 2018 – L2 – Q4 – Public Sector Audit

Explain the concept of Value-for-Money audit, its components, steps, and factors contributing to an effective VFM audit.

You're reporting an error for "PSAF – May 2018 – L2 – Q4 – Public Sector Audit"

FR – Mar 2025 – L2 – Q4 – Financial Statement Analysis

Compute adjusted financial ratios for 2022 and 2023, excluding business unit sale, and assess Ben Garzy LTD’s financial performance post-sale and IT system deployment.

You're reporting an error for "FR – Mar 2025 – L2 – Q4 – Financial Statement Analysis"

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Examine implications of Ghana's 2025-2028 fiscal policy proposals per PFM Act 2016.

You're reporting an error for "PSAF – Mar 2025 – L2 – Q3- Public sector fiscal planning and budgeting"

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Determine outcomes of forward contract and money market hedge for GPL's USD payment and recommend the best technique.

You're reporting an error for "FM – Mar 2025 – L2 – Q3 – Foreign exchange risk and currency risk management"

PSAF – Nov 2024 – L2 – Q4a – Financial Ratio Analysis

Compute financial ratios for Ghana Wind Farms LTD to analyze performance trends.

Ghana Wind Farms LTD

Statement of Profit or Loss for the Year Ended 31 December 2023

Ghana Wind Farms LTD

Statement of Financial Position as at 31 December 2023

You're reporting an error for "PSAF – Nov 2024 – L2 – Q4a – Financial Ratio Analysis"

FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation

Calculation of key financial ratios for Nagbe LTD to compare with Suah LTD and evaluate financial performance.

Statement of Profit or Loss for the year ended 30 September 2024

Statement of Financial Position as at 30 September 2024

Additional Information:

You're reporting an error for "FR – Nov 2024 – L2 – Q4a – Financial Ratios and Performance Evaluation"

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Explains the components of Value for Money (VFM) in the public sector.

You're reporting an error for "ICMA – Nov 2024 – L1 – Q3a – Value for Money (VFM)"

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Required:

You're reporting an error for "CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting"

CR – May 2019 – L3 – Q2 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)

Assess the accounting treatment of a policy change and analyze the profitability, liquidity, and efficiency ratios of the company based on the financial statements.

Additional Information:

You're reporting an error for "CR – May 2019 – L3 – Q2 – Accounting Policies, Changes in Accounting Estimates, and Errors (IAS 8)"

AAA – Nov 2012 – L3 – AII – Q3 – Public Sector Audits

Defines an audit focused on assessing the relationship between service value and resources used.