Acca P4 Dec 2007 Question Paper
Professional Level – Options Module
Advanced Financial Management
Thursday 6 December 2007
Time allowed Reading and planning: Writing:
15 minutes 3 hours
This paper is divided into two sections: Section A – BOTH questions are compulsory and MUST be attempted Section B – TWO questions ONLY to be attempted Formulae tables are on pages 9–13. Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.
The Association of Chartered Certified Accountants
Paper P4
Section A – BOTH questions are compulsory and MUST be attempted 1 You are the chief financial officer of International Enterprises, a multinational company with interests in Europe and the Far East. You are concerned about certain aspects of the company’s financial management. The company has enjoyed a high rate of growth over the last three years as a result of a single product’s development. This product has had a big impact in the fast moving mobile communications industry. However, the company does not have any new products in development and is relying on expanding its market share and developing upgraded versions of the current product. As part of your preparation for the board meeting to discuss the 2007 draft accounts, you have prepared a projected income statement and balance sheet for the year ending 31 December 2008. These projections are based upon a number of agreed assumptions taken from the company’s strategic plan. As part of the agenda, the board will also consider its dividend target for the forthcoming year. International Enterprises Income statement for the year ended 31 December 2008 (projected) $m 288·1 143·2 –––––– 144·9 36·1 –––––– 108·8 1·8 –––––– 107·0 32·1 –––––– 74·9 –––––– 2008 (projected) $m 168·0 3·2 25·6 151·8 –––––– 180·6 –––––– 348·6 ––––––
Advanced Financial Management
Thursday 6 December 2007
Time allowed Reading and planning: Writing:
15 minutes 3 hours
This paper is divided into two sections: Section A – BOTH questions are compulsory and MUST be attempted Section B – TWO questions ONLY to be attempted Formulae tables are on pages 9–13. Do NOT open this paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. This question paper must not be removed from the examination hall.
The Association of Chartered Certified Accountants
Paper P4
Section A – BOTH questions are compulsory and MUST be attempted 1 You are the chief financial officer of International Enterprises, a multinational company with interests in Europe and the Far East. You are concerned about certain aspects of the company’s financial management. The company has enjoyed a high rate of growth over the last three years as a result of a single product’s development. This product has had a big impact in the fast moving mobile communications industry. However, the company does not have any new products in development and is relying on expanding its market share and developing upgraded versions of the current product. As part of your preparation for the board meeting to discuss the 2007 draft accounts, you have prepared a projected income statement and balance sheet for the year ending 31 December 2008. These projections are based upon a number of agreed assumptions taken from the company’s strategic plan. As part of the agenda, the board will also consider its dividend target for the forthcoming year. International Enterprises Income statement for the year ended 31 December 2008 (projected) $m 288·1 143·2 –––––– 144·9 36·1 –––––– 108·8 1·8 –––––– 107·0 32·1 –––––– 74·9 –––––– 2008 (projected) $m 168·0 3·2 25·6 151·8 –––––– 180·6 –––––– 348·6 ––––––