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24 November 2015
Examination Paper
Answer any FOUR (4) questions.
Failure to do this will result in only the first FOUR (4) answers
being marked.
Time: 3 hours
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Financial Management © NCC Education Limited 2015
Answer any FOUR (4) questions
Marks
Question 1
a) Pero Ltd supply components to the aerospace industry. Extracts from their latest
company accounts are shown below.
2014 2013
Income statement $(000s) $(000s)
Revenue (sales) 8,950 7,788
Cost of sales 7,435 6,615
Gross profit 1,515 1,173
Statement of
financial position
Non-current assets
Land & buildings 11,476 11,815
Plant & machinery 8,244 9,051
19,720 20,866
Current assets
Inventory 4,890 5,005
Trade receivables 3,432 3,195
8,322 8,200
Current liabilities
Trade payables 1,566 1,438
Bank overdraft 846 756
2,412 2,194
Net current assets 5,910 6,006
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Financial Management © NCC Education Limited 2015
Marks
Calculate the following ratios for both years:
b) Based on your answers to part (a), evaluate the company's financial performance 7
in relation to profitability, liquidity, efficiency and financial gearing.
Total 25 Marks
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Financial Management © NCC Education Limited 2015
Marks
Question 2
Total 25 Marks
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Financial Management © NCC Education Limited 2015
Marks
Question 3
a) Suggest TWO (2) features of capital investments that make it necessary to carry 4
out investment appraisal before proceeding with expenditure.
b) Explain the use of payback period in investment appraisal and identify TWO (2) 7
advantages and TWO (2) disadvantages of this method.
c) Explain the technique of accounting rate of return and identify TWO (2) 7
advantages and TWO (2) disadvantages of this method.
d) Explain the net present value method of appraising capital investments, including 7
the decision rule of whether to accept or reject the project.
Total 25 Marks
Question 4
a) Define the term balanced scorecard and explain (with TWO (2) examples for 12
each perspective) how they each help measure performance.
c) Briefly explain why the balanced scorecard does not prescribe the particular 3
objectives, measures or targets that a business should adopt.
Total 25 Marks
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Financial Management © NCC Education Limited 2015
Marks
Question 5
a) Define the acronym IFRS and explain why they were introduced. 4
b) What is the minimum information specified in IAS1 for the statement of financial 3
position?
Total 25 Marks
End of paper
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Financial Management © NCC Education Limited 2015