Financial Management 2 (FM202) Tutorial Letter: October 2013 ... - imm
Page 1 of 6
Financial Management 2 (FM202) Tutorial Letter: October 2013 examination session Dear Student Please make note of the following key areas and notes pertaining to the Financial Management 2 October 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 and they flow on similarly to those of the previous exam session. Question 1 consists of multiple choice questions worth 10 marks which must be answered on the space provided on the front page of your answer books. Question 2 (20 marks) comprises of short theoretical questions and various definitions of financial terms from study units. Question 3 (25 marks), 4 (15 marks), 5 (10 marks) and 6 (20 marks) are long
questions
involving
independent
concepts,
calculations
and
interpretations (see content below). Exam Content Question 1 (MCQ) comprises of theoretical principles and definitions as well as short calculations worth one mark each. Question 2 (Definitions of Financial Terms) requires definitions and explanations of various financial terms and concepts for 15 marks. ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 2 of 6 55% (55 marks) of the paper is calculation based. There are theoretical components within all question’s from all study units. You will be required to comment, analyse or interpret your results for various answers. Calculation focus: o Ratio analysis, o Working capital (working capital cycle etc), o Time value of money (FV, PV, FVAn, FVAn, solving for other variables such as ‘PMT’ etc.), o Valuation of future cash flows (calculating the market value of debt and equity, yield to maturity (YTM) on bonds, dividend valuation (constant growth) etc.), o Short term financial decisions (Cash conversion cycle and its components etc.). You are reminded to have fully grasped the following concepts amongst others in order to master the topics covered in the examination: o Operating cash flows and free cash flows, o Inventory management, o Key concepts of financial management and the managerial finance environment, o Theory on bonds (bond yields, bond prices etc.) o Concepts of risk and return, o Ratio analysis theory (knowing what each ratio illustrates regarding solvency, liquidity, asset utilisation etc.) and o the theory and rationale behind short term financial decisions. Please note Appendix A and Appendix B on page 5 and 6 of this Tutorial Letter providing the formula sheet and interest factor tables you will be given in your exam. You are reminded that a formula sheet is just a tool to aid in the calculation process and is certainly not an exhaustive list of all that will be tested. It also does not give guidance on the interpretation and understanding of results which are skills you must master in your studying process. ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 3 of 6 General 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. It will most certainly aid in being time efficient in an exam if you are able to master the use of a financial calculator for time value of money calculations, 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. (See the example provided on page 4 of this letter.) In questions requiring a formula driven answer (such as ratio analysis, OCF etc.) it is always best to first provide the formula being used, then show the applicable figures inserted in the formula and then your final answer/value and not simply an amount as an answer alone. You are reminded to layout each answer clearly and logically 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. Analysis of questions must show insight and evidence of understanding of the academic content. Not adhering to the instructions provided as well as the guidance herein will result in you forfeiting marks. 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 October 2013 examination session. Kind regards The IMM GSM Team ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 4 of 6 EXAMPLE OF HOW TO SET OUT A ‘TIME VALUE OF MONEY’ CALULATION BASED ANSWER Q) You have an annuity receiving 30 payments of R30 000 a year, with the first payment to be received one year from now. The interest rate is 20% per annum, What is the Present Value of this annuity? POSSSIBLE ANSWER SETUPS: 1. Using a calculator:
2. Using a formula:
3. Using interest factor tables:
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 5 of 6 APPENDIX A FORMULA SHEET
PVA = A x PVIFA
Operating Cycle = AAI + ACP Cash Conversion Cycle = OC – APP Current ratio = Acid Test (quick) ratio = Inventory turnover = Average age of inventory =
x 365
Average collection period = Average payment period = Debt:Equity= Debt ratio= Interest cover ratio = Total asset turnover= ROE=
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 6 of 6 APPENDIX B
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Financial Management 2 (FM202) Tutorial Letter: October 2013 examination session Dear Student Please make note of the following key areas and notes pertaining to the Financial Management 2 October 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 and they flow on similarly to those of the previous exam session. Question 1 consists of multiple choice questions worth 10 marks which must be answered on the space provided on the front page of your answer books. Question 2 (20 marks) comprises of short theoretical questions and various definitions of financial terms from study units. Question 3 (25 marks), 4 (15 marks), 5 (10 marks) and 6 (20 marks) are long
questions
involving
independent
concepts,
calculations
and
interpretations (see content below). Exam Content Question 1 (MCQ) comprises of theoretical principles and definitions as well as short calculations worth one mark each. Question 2 (Definitions of Financial Terms) requires definitions and explanations of various financial terms and concepts for 15 marks. ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 2 of 6 55% (55 marks) of the paper is calculation based. There are theoretical components within all question’s from all study units. You will be required to comment, analyse or interpret your results for various answers. Calculation focus: o Ratio analysis, o Working capital (working capital cycle etc), o Time value of money (FV, PV, FVAn, FVAn, solving for other variables such as ‘PMT’ etc.), o Valuation of future cash flows (calculating the market value of debt and equity, yield to maturity (YTM) on bonds, dividend valuation (constant growth) etc.), o Short term financial decisions (Cash conversion cycle and its components etc.). You are reminded to have fully grasped the following concepts amongst others in order to master the topics covered in the examination: o Operating cash flows and free cash flows, o Inventory management, o Key concepts of financial management and the managerial finance environment, o Theory on bonds (bond yields, bond prices etc.) o Concepts of risk and return, o Ratio analysis theory (knowing what each ratio illustrates regarding solvency, liquidity, asset utilisation etc.) and o the theory and rationale behind short term financial decisions. Please note Appendix A and Appendix B on page 5 and 6 of this Tutorial Letter providing the formula sheet and interest factor tables you will be given in your exam. You are reminded that a formula sheet is just a tool to aid in the calculation process and is certainly not an exhaustive list of all that will be tested. It also does not give guidance on the interpretation and understanding of results which are skills you must master in your studying process. ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 3 of 6 General 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. It will most certainly aid in being time efficient in an exam if you are able to master the use of a financial calculator for time value of money calculations, 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. (See the example provided on page 4 of this letter.) In questions requiring a formula driven answer (such as ratio analysis, OCF etc.) it is always best to first provide the formula being used, then show the applicable figures inserted in the formula and then your final answer/value and not simply an amount as an answer alone. You are reminded to layout each answer clearly and logically 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. Analysis of questions must show insight and evidence of understanding of the academic content. Not adhering to the instructions provided as well as the guidance herein will result in you forfeiting marks. 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 October 2013 examination session. Kind regards The IMM GSM Team ____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 4 of 6 EXAMPLE OF HOW TO SET OUT A ‘TIME VALUE OF MONEY’ CALULATION BASED ANSWER Q) You have an annuity receiving 30 payments of R30 000 a year, with the first payment to be received one year from now. The interest rate is 20% per annum, What is the Present Value of this annuity? POSSSIBLE ANSWER SETUPS: 1. Using a calculator:
2. Using a formula:
3. Using interest factor tables:
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 5 of 6 APPENDIX A FORMULA SHEET
PVA = A x PVIFA
Operating Cycle = AAI + ACP Cash Conversion Cycle = OC – APP Current ratio = Acid Test (quick) ratio = Inventory turnover = Average age of inventory =
x 365
Average collection period = Average payment period = Debt:Equity= Debt ratio= Interest cover ratio = Total asset turnover= ROE=
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
Page 6 of 6 APPENDIX B
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM202
