Financial Management 3 (FM303) Tutorial Letter: May 2013 ... - imm
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Financial Management 3 (FM303) Tutorial Letter: May 2013 examination session Dear Student Please make note of the following key areas and notes pertaining to the Financial Management 3 May Examination. You are reminded that the detail provided herein is merely a guideline for clarity and direction and you are encouraged to complete the entirety of the module content as outlined in the Learner Guide. Exam Structure The paper consists of six (6) questions resulting in an exam total of 100 marks. All questions must be attempted. Question 1 consists of a multiple choice question worth 20 marks which must be answered on the space provided on the front page of your answer books. Question 2 comprises of short questions requiring definitions and explanations of various financial terms and concepts for 5 marks. Question 3 (20 marks), 4 (20 marks), 5 (25 marks) and 6 (10 marks) are long
questions
involving
independent
concepts,
calculations
and
interpretations. Exam Content Question 1 (MCQ) comprises of theoretical principles and definitions mostly with only two questions being calculations. Question 2 requires definitions/ explanations of three independent financial terms/ concepts for 5 marks. ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
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52% (52 marks) of the paper is based on theoretical principles of the module and on interpretation of calculated figures. The remainder of questions’ 3, 4, 5 and 6 are calculations. You will be required to comment, analyse or interpret your results for various answers. Calculation focus: Fundamentals of financial management (total net operating working capital, MVA, EVA, value of operations, value of share capital, total value etc.), risk and return fundamentals (standard deviation, CV, variance, expected returns of projects etc.), long term investment calculations (NPV, IRR, payback period, Gordon Constant Growth valuation model etc.) You are reminded to have fully grasped the following concepts amongst others in order to master the topics covered in the examination: The theory on leasing, theory on capital budgeting, risk and return in its entirety, free cash flow and its components and the theory on and tools for calculation long term investment decisions (ANPV, accept vs. reject decisions etc.). Please note Appendix A and Appendix B on page 4 and 5 of this Tutorial Letter providing the formula sheet and interest factor tables you will be given in your exam. General Time management per question must be monitored carefully. Aim to mark maximise by attempting those areas which will result in you achieving the most marks initially. Manage your time carefully! You are reminded to show your workings and calculations where necessary and ensure that they can be easily referenced. Examiners will not ‘hunt’ for substantiating workings. Number all questions CLEARLY and indicate ‘End’ when you have completed all questions in the exam.
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
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It will most certainly aid in being time efficient in an exam if you are able to master the use of a financial calculator, however, you will not be penalised should you choose to use a formula. It is a requirement to continue to illustrate all workings in any answer. There are some questions which provide suggested formats. These are to be used as a guide and time must not be wasted on formats unnecessarily. An answer sheet has been provided to aid in the calculation of various concepts such as standard deviation. However if you choose to use a calculator you need not use the answer sheet but MUST show all inputs used in arriving at your final answer. In a particular question if you choose to use a formula instead of a calculator, there is an answer sheet provided (similar to that of the assignment) and you are required to include this answer sheet in your answer book/s on submission if utilised. You are reminded to clearly and logically answer each question in a format that can be easily followed by the marker. An indication as to how many decimal places should be applied in your answers will be provided wherever necessary. You are encouraged to follow the indicated units carefully. Use mark allocation as a guide as to how much information is required when formulating your responses. May we remind you that we are always available to assist with academic queries. Academic queries should be submitted in writing to: [email protected] We wish you a successful May 2013 examination session. Kind regards The IMM GSM Team
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
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APPENDIX A FORMULA SHEET Operating Cycle = AAI + ACP Cash Conversion Cycle = OC – APP MVA = Market value of shares – Equity capital supplied by shareholders EVA = EBIT (1 – Tax rate) – (Total net operating capital) (WACC) EVA = (Operating capital) (ROIC – WACC) DTL = Value of ordinary equity = Total value = Value of operations + Value of non-operating assets Vop = FCF(1+g) / WACC-g Value of ordinary share capital = Total value – Value of debt
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
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APPENDIX B – TIME VALUE OF MONEY TABLE Present Value of 1
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
Financial Management 3 (FM303) Tutorial Letter: May 2013 examination session Dear Student Please make note of the following key areas and notes pertaining to the Financial Management 3 May Examination. You are reminded that the detail provided herein is merely a guideline for clarity and direction and you are encouraged to complete the entirety of the module content as outlined in the Learner Guide. Exam Structure The paper consists of six (6) questions resulting in an exam total of 100 marks. All questions must be attempted. Question 1 consists of a multiple choice question worth 20 marks which must be answered on the space provided on the front page of your answer books. Question 2 comprises of short questions requiring definitions and explanations of various financial terms and concepts for 5 marks. Question 3 (20 marks), 4 (20 marks), 5 (25 marks) and 6 (10 marks) are long
questions
involving
independent
concepts,
calculations
and
interpretations. Exam Content Question 1 (MCQ) comprises of theoretical principles and definitions mostly with only two questions being calculations. Question 2 requires definitions/ explanations of three independent financial terms/ concepts for 5 marks. ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
Page 2 of 5
52% (52 marks) of the paper is based on theoretical principles of the module and on interpretation of calculated figures. The remainder of questions’ 3, 4, 5 and 6 are calculations. You will be required to comment, analyse or interpret your results for various answers. Calculation focus: Fundamentals of financial management (total net operating working capital, MVA, EVA, value of operations, value of share capital, total value etc.), risk and return fundamentals (standard deviation, CV, variance, expected returns of projects etc.), long term investment calculations (NPV, IRR, payback period, Gordon Constant Growth valuation model etc.) You are reminded to have fully grasped the following concepts amongst others in order to master the topics covered in the examination: The theory on leasing, theory on capital budgeting, risk and return in its entirety, free cash flow and its components and the theory on and tools for calculation long term investment decisions (ANPV, accept vs. reject decisions etc.). Please note Appendix A and Appendix B on page 4 and 5 of this Tutorial Letter providing the formula sheet and interest factor tables you will be given in your exam. General Time management per question must be monitored carefully. Aim to mark maximise by attempting those areas which will result in you achieving the most marks initially. Manage your time carefully! You are reminded to show your workings and calculations where necessary and ensure that they can be easily referenced. Examiners will not ‘hunt’ for substantiating workings. Number all questions CLEARLY and indicate ‘End’ when you have completed all questions in the exam.
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
Page 3 of 5
It will most certainly aid in being time efficient in an exam if you are able to master the use of a financial calculator, however, you will not be penalised should you choose to use a formula. It is a requirement to continue to illustrate all workings in any answer. There are some questions which provide suggested formats. These are to be used as a guide and time must not be wasted on formats unnecessarily. An answer sheet has been provided to aid in the calculation of various concepts such as standard deviation. However if you choose to use a calculator you need not use the answer sheet but MUST show all inputs used in arriving at your final answer. In a particular question if you choose to use a formula instead of a calculator, there is an answer sheet provided (similar to that of the assignment) and you are required to include this answer sheet in your answer book/s on submission if utilised. You are reminded to clearly and logically answer each question in a format that can be easily followed by the marker. An indication as to how many decimal places should be applied in your answers will be provided wherever necessary. You are encouraged to follow the indicated units carefully. Use mark allocation as a guide as to how much information is required when formulating your responses. May we remind you that we are always available to assist with academic queries. Academic queries should be submitted in writing to: [email protected] We wish you a successful May 2013 examination session. Kind regards The IMM GSM Team
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
Page 4 of 5
APPENDIX A FORMULA SHEET Operating Cycle = AAI + ACP Cash Conversion Cycle = OC – APP MVA = Market value of shares – Equity capital supplied by shareholders EVA = EBIT (1 – Tax rate) – (Total net operating capital) (WACC) EVA = (Operating capital) (ROIC – WACC) DTL = Value of ordinary equity = Total value = Value of operations + Value of non-operating assets Vop = FCF(1+g) / WACC-g Value of ordinary share capital = Total value – Value of debt
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
Page 5 of 5
APPENDIX B – TIME VALUE OF MONEY TABLE Present Value of 1
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing May 2013 examination session FM303
