DFS - Exam discussion post

135

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  • JointyJointy Feels At Home Registered Posts: 78
    xamix wrote: »
    did everyone advise him to continue to invest or not? I said to continue to invest as they were still doing ok...i.e they were still performing reasonably. Not sure if i should have said not to though :glare:

    i advised him not to because if downturn in profit then interest would take up profits and no dividends would be paid. also wasnt as profitable as year before and is nearly highly geared.
  • PigpenPigpen Trusted Regular Registered Posts: 331
    xamix wrote: »
    did everyone advise him to continue to invest or not? I said to continue to invest as they were still doing ok...i.e they were still performing reasonably. Not sure if i should have said not to though :glare:


    I advised him to sell -Purely because of the down turn on the last 3 ratios and a past paper I did that put a company in a similar position that I said was ok and the reccomendation was to withdraw - I think they like you to make a decision wither way and not to sit on the fence
  • goldandblackgoldandblack Just Joined Registered Posts: 4
    xamix wrote: »
    did everyone advise him to continue to invest or not? I said to continue to invest as they were still doing ok...i.e they were still performing reasonably. Not sure if i should have said not to though :glare:

    i put not to invest due to the costs increasing and also the finance costs were rising along with the loan, therefore the interest ratios and interest cover ratio was rising meaning higher risk? the net profit was also shit, but ive probably said all the wrong things!! lol
  • kjg-kjkjg-kj Feels At Home Registered Posts: 68
    Jointy wrote: »
    i advised him not to because if downturn in profit then interest would take up profits and no dividends would be paid. also wasnt as profitable as year before and is nearly highly geared.

    Pretty much snap!
  • JointyJointy Feels At Home Registered Posts: 78
    i put not to invest due to the costs increasing and also the finance costs were rising along with the loan, therefore the interest ratios and interest cover ratio was rising meaning higher risk? the net profit was also shit, but ive probably said all the wrong things!! lol

    i said same as you sounds reasonable to me
  • Big BirdBig Bird Feels At Home Registered Posts: 62
    I also said not to invest, but I am not sure if that was right or not, I could make my mind up, I was thinking about if they had invested monies in fixed assets that were not yet adding to any profits, in the end I plumped for not to invest,:001_unsure::001_unsure:
  • PrimblePrimble Experienced Mentor Registered Posts: 734
    i said dont invest as profits went down and they were highly geared
  • clazaridisclazaridis Feels At Home Registered Posts: 30
    Don't worry about it Nagra, I only managed to get 1 and half past papers in for revsion which was a very poor effort but i think i'd like to try and get PEV & PCR out the way and concentratre on understanding DFS for December!! Fingers crossed for my PCR retake tomorrow!! Need to get the flexed budget right this time!
  • beansprout64beansprout64 Feels At Home Registered Posts: 29
    i said not to aswell mainly because section 2 was similar to many past papers. i.e gross profit is better, other 3 are worse and answers have always said not to invest
  • JointyJointy Feels At Home Registered Posts: 78
    kjg-kj wrote: »
    Pretty much snap!

    cool i feel better now
  • xamixxamix New Member Registered Posts: 11
    Jointy wrote: »
    i advised him not to because if downturn in profit then interest would take up profits and no dividends would be paid. also wasnt as profitable as year before and is nearly highly geared.

    hmmm opps...oh well, i did say that the gearing is still below 50% so this shouldnt cause too much concern, and i also said revenue was on the up etc..

    Also...in the journals with the advertising costs accrual..did everyone debit admin expenses or debit distribution costs? i put it to admin as it didnt say where to, but i put a note saying why. Sometimes in the past they have put advertising to distribution which is a bit weird..
  • PigpenPigpen Trusted Regular Registered Posts: 331
    What about the impairment bit - What did you put?
  • laurloulaurlou Settling In Nicely Registered Posts: 23
    Yep also got these figures... did everyone get 476 or something (cant remember exactly) for Cash flow?

    was that some thing to do with sale of PPE?
  • clazaridisclazaridis Feels At Home Registered Posts: 30
    Ooo i said not to invest as well due to the drop in profits and the increase in the gearing etc, maybe i'll get a point for something there!! woo hoo!!
  • PigpenPigpen Trusted Regular Registered Posts: 331
    xamix wrote: »
    hmmm opps...oh well, i did say that the gearing is still below 50% so this shouldnt cause too much concern, and i also said revenue was on the up etc..

    Also...in the journals with the advertising costs accrual..did everyone debit admin expenses or debit distribution costs? i put it to admin as it didnt say where to, but i put a note saying why. Sometimes in the past they have put advertising to distribution which is a bit weird..

    I put it to Distribution as it was a cost relating to sale of goods (advertising)
  • Big BirdBig Bird Feels At Home Registered Posts: 62
    Yep I put it on distribution costs, although I dont think it would really matter
    :001_smile:
  • HunnieHunnie Feels At Home Registered Posts: 41
    xamix wrote: »
    hmmm opps...oh well, i did say that the gearing is still below 50% so this shouldnt cause too much concern, and i also said revenue was on the up etc..

    Also...in the journals with the advertising costs accrual..did everyone debit admin expenses or debit distribution costs? i put it to admin as it didnt say where to, but i put a note saying why. Sometimes in the past they have put advertising to distribution which is a bit weird..

    I did the following:
    DR Prepayment (2 months)
    CR Admin expenses

    DR Distribution costs
    CR Accrual (2 months)
  • JointyJointy Feels At Home Registered Posts: 78
    Pigpen wrote: »
    I put it to Distribution as it was a cost relating to sale of goods (advertising)

    i put it to distribution cost. did you put the other one to admin cant remember what it was?
  • PigpenPigpen Trusted Regular Registered Posts: 331
    yep - One was an accrual one was a prepayment - One to each cost centre - Dis / admin
  • columbiacolumbia Experienced Mentor Registered Posts: 580
    Hi I put the advertising to distribution as it related to sales - I put a note at the bottom explaining why I had done this.

    I also said not to invest as the company was heavily reliant on debt, with the increased loan and overdraft. So even if my formula worked out wrong I hope my excessive waffling covered everything else.
  • xamixxamix New Member Registered Posts: 11
    Hunnie wrote: »
    I did the following:
    DR Prepayment (2 months)
    CR Admin expenses

    DR Distribution costs
    CR Accrual (2 months)

    i did the same apart from putting it to admin rather than distribution...oh well..glad i put a note now :001_smile:
  • JointyJointy Feels At Home Registered Posts: 78
    does anyone know if they operate a negative marking scheme. I wrote a bit off rubbish along with the definitions of assets and liabilities?
  • HunnieHunnie Feels At Home Registered Posts: 41
    Jointy wrote: »
    does anyone know if they operate a negative marking scheme. I wrote a bit off rubbish along with the definitions of assets and liabilities?

    i don't think they do - i think if you answer a question wrong it is simply ignored. I put something completely irrelevant for one of the questions on last years PCR paper and still passed :)
  • PrimblePrimble Experienced Mentor Registered Posts: 734
    does it matter i just opened an advertising account?
  • JointyJointy Feels At Home Registered Posts: 78
    cool because i put a load of rubbish in around the definitions hopefully she can find them thts how much rubbish i wrote
  • lynne03lynne03 New Member Registered Posts: 10
    ooooooooooh no I gave the defo of assets and liabilities but didn't discuss "current" do you think i'll loose many marks
  • GuruGuru Feels At Home Registered Posts: 33
    Primble wrote: »
    does it matter i just opened an advertising account?

    Almost certainly not in this situation, but remember you're looking to produced general overviews, so there doesn't need to be lots of lines of data, just summaries.

    While working through a past paper yesterday, I put Accruals as their own line in current assets. Checking the answer, saw that they'd been rolled into Trade Payables, adjusted my behaviour for today.

    But I think it's nitpicking - as long as it ends up in the right section of the right document, then you've dealt with the issue.
  • GuruGuru Feels At Home Registered Posts: 33
    lynne03 wrote: »
    ooooooooooh no I gave the defo of assets and liabilities but didn't discuss "current" do you think i'll loose many marks

    Doubt it, assuming the definition is broadly correct.
  • PrimblePrimble Experienced Mentor Registered Posts: 734
    thank god
  • pernicketypernickety Feels At Home Registered Posts: 47
    Re:the investing or not. I sat on the fence a little... I fear... I put that the gross PM was still good and the NP acceptable, but that gearing (I did debt/equity, as easier) was bad and up near the maximum; the company were financed heavily and that they would not be able to get further finance off the banks until they improved this ratio. They were just about covering their interest, but they could not afford for profits to be reduced. Dividends would be small or non- existant to their investors, but if management could address the debt issue and improve profit margins things may turn around. I went on to say that if investment was left in the company, that it should most definitely be reviewed prior to end of next accounts.

    First part I&E/BS ok balanced - consolidated didn't despite leaving, and carrying on with the rest, to come back to it with an hour to spare! Something to do with the minority profits as was out by £640, but something fundamentally wrong, as had to make it balance by adapting this figure -with a note left for examiner. Cash flow ok too, balanced fine. Put the text book answer for assets and liabilities, as memorised. Ratios and analysis OK too I hope, as above.

    MAC and DFS done, if pass will have to give myself a payrise!:tongue_smilie
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