Topic: Financial management

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SCS – Nov 2019 – L3 – Q2a – Financial management

Analyze the financial performance of Ghanalux in 2018 and its effect on the bank overdraft.

Question

i) Analyze the financial performance of Ghanalux in 2018 to determine the extent to which the continuing large bank overdraft is attributable to profitability issues, cash flow management issues, or a combination of both.

ii) Prepare a forecasted cash flow statement for Ghanalux in 2019 to determine the likely bank balance or bank overdraft at the end of 2019. Assume the financial relationships and ratios are largely maintained from 2018 to 2019.

iii) iii) Recommend measures to improve the cash flow of the company.

(20 marks)

Answer

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Tags: Cash flow improvement, Working Capital Management
Level: Level 3

Topic: Financial management
Series: NOV 2019

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

Question

Assume a 10% interest on the outstanding loan and 22% Corporate Tax.

Required:
i) Calculate the operating gearing and financial gearing for GGOH. (5 marks)

ii) Assess how these ratios could impact an investor’s decision to invest in GGOH. (5 marks)

Answer

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Tags: Corporate finance, Financial Gearing, Investor decision, Operating Gearing, Ratio Analysis
Level: Level 3

Topic: Financial management
Series: NOV 2020

SCS – MAR 2024 – L3 – Q5b – Financial management

Calculate the effective rate of borrowing for three months and explain the advantages of convertible bonds.

Question

With reference to Option Two:

i) What would be its effective rate of borrowing for the three months if US dollar LIBOR is 4.50% at the start of the notional interest period for the FRA? (2 marks)
ii) What are the advantages of Convertible Bonds? (3 marks)

Answer

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Tags: Borrowing rate, Convertible Bonds, Financing, FRA
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5a – Financial management

Calculate various financial ratios including ROCE, EPS, DPS, and TSR based on given financial data.

Question

With reference to the information in Option One available to Prestige as presented by Professor Joseph Laing, a business consultant, calculate the following:

i) Return on Capital Employed (ROCE) (1 mark)
ii) Earnings Per Share (EPS) (1 mark)
iii) Dividend Per Share (DPS) (2 marks)
iv) Total Shareholders Return (TSR) (2 marks)
v) Explain the difference between ROCE and Accounting Rate of Return, their essential features, and relationship (4 marks)

Answer

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Tags: DPS, EPS, Financial Ratios, ROCE, TSR
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – Aug 2022 – L3 – Q5 – Financial Management

Prepare Little Bee’s financial forecast and calculate its gearing ratios, explaining their significance to Bazar.

Question

Using the additional information presented by AB Consult & Associate to the Director of Finance and Operations, Mrs. Emma Owusu-Kwakye, on 4 August, prepare the following:

i) Little Bee new forecasted Statement of financial performance after the changes that will be discussed at the board meeting on the 5 August 2022. (4 marks)
ii) Calculate the operating gearing, measured as the ratio of the percentage increase in profit before interest and tax divided by the percentage increase in sales. (2 marks)
iii) Calculate the financial gearing, measured as the ratio of the percentage change in total earnings (or EPS) to the percentage increase in profit before interest and tax. (2 marks)
iv) Calculate the Combined gearing, measured as the ratio of the percentage change in total earnings (or EPS) to the percentage increase in sales. (2 marks)
v) Explain the significance of operating gearing and financial gearing to the management of Bazar. (10 marks)

Answer

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Tags: Business Valuation, Combined Gearing, Financial Forecast, Financial Gearing, Operating Gearing
Level: Level 3

Topic: Financial management
Series: AUG 2022

SCS – May 2020 – L3 – Q4 – Financial Management

Evaluate the financial impact of the contract proposal from Look and Like Ltd for Customer Focused Ltd.

Question

Customer Focused Ltd has received a proposal from a potential supplier, Look and Like
Ltd, to provide fresh produce (Exhibit 2a) and is considering whether to accept. Kpakpo
Armah has written a note (Exhibit 2b) about Look and Like Ltd.
Required:
Using the information available, including information you feel relevant from your answer
to Section A:

Evaluate the proposal in terms of the potential impact on the financial performance for Customer Focused Ltd. You should prepare an estimate of the incremental financial outcome of accepting the contract for the minimum order level by calculating a profit or loss after tax for the period up to 31 December 2020. Calculate and comment on the impact of contract acceptance on sales, operating profit, and profit after tax for the forecast figures for 2020 for Customer Focused Ltd. Include any further observations that you feel are relevant.

Answer

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Tags: Contract Evaluation, Financial Performance, Profit margin, Sales Growth
Level: Level 3

Topic: Financial management
Series: MAY 2020

SCS – May 2020 – L3 – Q2 – Financial Management

Conduct a financial appraisal of Customer Focused Ltd, including key ratio calculations and commentary.

Question

Customer Focused Ltd has updated its management accounts (Exhibit 1) to produce a
forecast for the year 2020 and these have indicated some significant problems. The business
owners are unsure what to do next.
Required:
You are acting as an advisor to the company and they ask you to:

Prepare a financial appraisal of Customer Focused Ltd to identify the problems faced by the company by calculating and commenting on key ratios that you consider important for the company. You should specifically include in your appraisal an analysis of sales growth, operating margins, working capital (in terms of inventory, receivables, and payable days), and changes in cash balances over the years that the company has been operating.

Answer

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Tags: Cash Balance, Financial Ratios, Operating Margins, Sales Growth, Working Capital
Level: Level 3

Topic: Financial management
Series: MAY 2020

SCS – Dec 2022 – L3 – Q5 – Financial management

Calculate the required loan, interest earned, and the Cedi gain or loss from a money market hedge.

Question

The Board has directed the CEO to take the necessary steps to arrange with its bankers, a money market hedge for the expected receipts from DMP, to protect the company against the downside risk of expected Cedi appreciation.

Required:
As the Financial Controller of the company, the CEO has asked you to calculate the following relating to money market hedge:

a) The initial dollar amount of loan that TCWL could take from the bank in Cameroon on 1 December 2022 and the cedi equivalent of the initial loan if converted on the same date. (3 marks)
b) The total Cedi amount and interest the company will earn by 31 May 2023, if the converted amount is invested in Ghana for the duration of the money market hedge. (3 marks)
c) The Cedi gain or loss that TCWL would make by hedging. (2 marks)
d) The effective forward rate of the Cedi to U.S. dollar on 31 May 2023. (2 marks)

Answer

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Tags: Currency risk, Financial management, Foreign Exchange, Money market hedge
Level: Level 3

Topic: Financial management
Series: DEC 2022

SCS – Nov 2019 – L3 – Q2a – Financial management

Analyze the financial performance of Ghanalux in 2018 and its effect on the bank overdraft.

Question

iii) iii) Recommend measures to improve the cash flow of the company.

(20 marks)

Answer

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Tags: Cash flow improvement, Working Capital Management
Level: Level 3

Topic: Financial management
Series: NOV 2019

SCS – Nov 2020 – L3 – Q8 – Financial management

Calculate operating and financial gearing for GGOH and assess how these ratios impact investor decisions.

Question

Assume a 10% interest on the outstanding loan and 22% Corporate Tax.

Required:
i) Calculate the operating gearing and financial gearing for GGOH. (5 marks)

ii) Assess how these ratios could impact an investor’s decision to invest in GGOH. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate finance, Financial Gearing, Investor decision, Operating Gearing, Ratio Analysis
Level: Level 3

Topic: Financial management
Series: NOV 2020

SCS – MAR 2024 – L3 – Q5b – Financial management

Calculate the effective rate of borrowing for three months and explain the advantages of convertible bonds.

Question

With reference to Option Two:

Answer

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Tags: Borrowing rate, Convertible Bonds, Financing, FRA
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – MAR 2024 – L3 – Q5a – Financial management

Calculate various financial ratios including ROCE, EPS, DPS, and TSR based on given financial data.

Question

With reference to the information in Option One available to Prestige as presented by Professor Joseph Laing, a business consultant, calculate the following:

Answer

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Tags: DPS, EPS, Financial Ratios, ROCE, TSR
Level: Level 3

Topic: Financial management
Series: MAR 2024

SCS – Aug 2022 – L3 – Q5 – Financial Management

Prepare Little Bee’s financial forecast and calculate its gearing ratios, explaining their significance to Bazar.

Question

Using the additional information presented by AB Consult & Associate to the Director of Finance and Operations, Mrs. Emma Owusu-Kwakye, on 4 August, prepare the following:

Answer

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Tags: Business Valuation, Combined Gearing, Financial Forecast, Financial Gearing, Operating Gearing
Level: Level 3

Topic: Financial management
Series: AUG 2022

SCS – May 2020 – L3 – Q4 – Financial Management

Evaluate the financial impact of the contract proposal from Look and Like Ltd for Customer Focused Ltd.

Question

Answer

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Tags: Contract Evaluation, Financial Performance, Profit margin, Sales Growth
Level: Level 3

Topic: Financial management
Series: MAY 2020

SCS – May 2020 – L3 – Q2 – Financial Management

Conduct a financial appraisal of Customer Focused Ltd, including key ratio calculations and commentary.

Question

Answer

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Tags: Cash Balance, Financial Ratios, Operating Margins, Sales Growth, Working Capital
Level: Level 3

Topic: Financial management
Series: MAY 2020

SCS – Dec 2022 – L3 – Q5 – Financial management

Calculate the required loan, interest earned, and the Cedi gain or loss from a money market hedge.

Question

Required:
As the Financial Controller of the company, the CEO has asked you to calculate the following relating to money market hedge:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Currency risk, Financial management, Foreign Exchange, Money market hedge
Level: Level 3