DO NOT OPEN THIS QUESTION PAPER UNTIL YOU ARE TOLD TO DO SO.
Financial Pillar
Saturday - 1 September 2012 Instructions to candidates You are allowed three hours to answer this question paper. You are allowed 20 minutes reading time before the examination begins during which you should read the question paper and, if you wish, highlight and/or make notes on the question paper. However, you will not be allowed, under any circumstances, to open the answer book and start writing or use your calculator during this reading time. You are strongly advised to carefully read ALL the question requirements before attempting the question concerned (that is all parts and/or subquestions). ALL answers must be written in the answer book. Answers written on the question paper will not be submitted for marking. You should show all workings as marks are available for the method you use. ALL QUESTIONS ARE COMPULSORY. Section A comprises 5 questions and is on pages 2 to 8. Section B comprises 2 questions and is on pages 10 to 13. Maths tables and formulae are provided on pages 15 to 17. The list of verbs as published in the syllabus is given for reference on page 19. Write your candidate number, the paper number and examination subject title in the spaces provided on the front of the answer book. Also write your contact ID and name in the space provided in the right hand margin and seal to close. Tick the appropriate boxes on the front of the answer book to indicate the questions you have answered.
The Chartered Institute of Management Accountants 2012
F2 – Financial Management
F2 – Financial Management
SECTION A – 50 MARKS [You are advised to spend no longer than 18 minutes on each question in this section.]
ANSWER ALL FIVE QUESTIONS IN THIS SECTION
Question One Share-based Payment RT granted 1,000 share appreciation rights (SARs) to each of its 500 employees on 1 July 2010. To be eligible for the rights, employees must remain employed by RT for 3 years from the date of grant. The rights must be exercised in July 2013, with settlement due in cash. • In the year to 30 June 2011, 42 employees left and a further 75 were expected to leave over the following two years. • In the year to 30 June 2012, 28 employees left and a further 25 were expected to leave in the following year. The fair value of each SAR was $9 at 30 June 2011 and $11 at 30 June 2012.
Required: (a) (i)
(ii)
Prepare the journal entry to record the expense associated with the SARs for the year ended 30 June 2012, in accordance with IFRS 2 Share-based payment. Explain, in accordance with IFRS 2 Share-based payment, how the recognition and measurement of a share-based payment would differ, if it was to be settled in equity rather than cash. (5 marks)
Retirement benefits RT operates a defined benefit pension plan for its employees. At 1 July 2011 the fair value of the pension plan assets was $2,200,000 and the present value of the pension plan liabilities was $2,400,000. The interest cost on the pension plan liabilities was estimated at 8% and the expected return on pension plan assets at 5%. The actuary estimates that the current service cost for the year ended 30 June 2012 is $500,000. RT made contributions into the pension plan of $300,000 and the pension plan paid $450,000 to retired members in the year to 30 June 2012. At 30 June 2012 the fair value of the pension plan assets was $2,300,000 and the present value of the pension plan liabilities was $2,700,000. Actuarial gains and losses are included within the other comprehensive income of RT as incurred.
The question requirement for part b) is on the opposite page
September 2012
2
Financial Management
Required: (b) (i) Calculate the net expense that will be included in RT’s profit or loss for the year ended 30 June 2012, in accordance with IAS 19 Employee benefits. (ii)
Calculate the amount that will be included in RT’s other comprehensive income for the year ended 30 June 2012, in accordance with IAS 19 Employee benefits. (5 marks) Total for Question One = 10 marks
TURN OVER
Financial Management
3
September 2012
Question Two GH has a number of investments in subsidiary and associate entities. During the year to 30 June 2012 GH acquired an investment in AB. The statement of financial position of the GH group for the year ended 30 June 2012 and its comparative are shown below: 2012 $000
2011 $000
25,500 6,800 6,200 38,500
22,200 6,000 5,700 33,900
42,500 81,000
42,950 76,850
Non-controlling interests Total equity
18,000 4,200 1,000 10,550 33,750 9,750 43,500
15,000 10,050 25,050 9,100 34,150
Non-current liabilities Long-term borrowings Current liabilities Total liabilities
20,550 16,950 37,500
26,200 16,500 42,700
Total equity and liabilities
81,000
76,850
ASSETS Non-current assets Property, plant and equipment Goodwill Investment in associate
Current assets Total assets EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital ($1 shares) Share premium Revaluation reserve Retained earnings
Additional information: 1. There were no disposals of property, plant and equipment in the year. Depreciation charged in the year ended 30 June 2012 was $1,200,000. 2. GH’s share of the associate’s profit for the year ended 30 June 2012 was $1,800,000. 3. The total comprehensive income attributable to non-controlling interests for the year ended 30 June 2012 was $350,000. 4. GH acquired 75% of the equity share capital of AB on 1 January 2012 for a cash consideration of $300,000 plus the issue of 1 million $1 equity shares in GH, which had a deemed value of $2.15 per share at the date of acquisition. The fair values of the net assets of AB acquired on 1 January 2012 were as follows:
Property, plant and equipment Inventories Receivables Cash and cash equivalents Payables
$000 1,200 1,700 900 200 (1,800) 2,200
5. GH did not acquire or dispose of any other investments in the year. The group policy is to value non-controlling interests at acquisition at its proportionate share of the fair value of the net assets acquired. 6. AB paid a dividend in the year but GH did not.
September 2012
4
Financial Management
Required: Prepare the extracts from the consolidated statement of cash flows for GH for: (i)
Cash flows from investing activities for the year ended 30 June 2012; and
(ii)
Cash flows from financing activities for the year ended 30 June 2012. Total for Question Two = 10 marks
TURN OVER
Financial Management
5
September 2012
Question Three MLR prepares its financial statements in accordance with International Financial Reporting Standards and is listed on its local stock exchange. MLR is considering the acquisition of overseas operations. Two geographical areas have been targeted, A-land and B-land. Entity A operates in A-land and entity B operates in B-land. Each entity is listed on its local stock exchange. The most recent financial statements of entities A and B have been converted into MLR’s currency for ease of comparison. The financial indicators from these financial statements and those of MLR are provided below.
Revenue Gross profit margin Profit after tax/revenue x 100 Gearing Approximate rate of interest available in the respective markets P/E ratio
MLR $600m 32% 18% 37%
A $210m 28% 10% 66%
B $400m 19% 11% 26%
8% 17.3
5% 12.1
10% 16.6
Required: (a) Analyse the information provided by the key financial indicators above and explain the impact that each entity would have on the financial indicators of MLR. (7 marks)
(b) Explain the limitations, to MLR, of using this type of analysis to decide on a potential takeover target. (3 marks) Total for Question Three = 10 marks
September 2012
6
Financial Management
Question Four EMR made an investment in a debt instrument on 1 July 2010 at its nominal value of $4,000,000. The instrument carries a fixed coupon interest rate of 7%, which is receivable annually in arrears. The instrument will be redeemed for $4,530,000 on 30 June 2014. Transaction costs associated with the investment were $200,000 and were paid on 1 July 2010. The effective interest rate applicable to this instrument has been calculated at approximately 8.4%. EMR intends to hold this investment until its redemption date.
Required: (a) (i)
Explain how this investment should be classified and prepare the journal entry to initially record it in accordance with relevant accounting standards.
(ii)
Calculate the carrying value of the investment to be included in EMR’s statement of financial position as at 30 June 2012, in accordance with IAS 39 Financial instruments: recognition and measurement. (5 marks)
EMR’s main business risk is the price of raw materials. As a manufacturer of jewellery, its profits can be significantly affected by the price of precious metals. Therefore, in order to minimise the risk of future price increases adversely affecting its future profits, EMR entered into a forward contract on 1 May 2012, at nil cost, to purchase 100,000 units of metal A at $105 per unit on 1 August 2012. At 30 June 2012, the forward rate for purchasing 100,000 units of metal A was $101 per unit. EMR adopts hedge accounting where permitted by IAS 39 Financial instruments: recognition and measurement.
Required: (b) Explain how this forward contract should be accounted for by EMR in its financial statements for the year ended 30 June 2012, in accordance with IAS 39 Financial instruments: recognition and measurement. (5 marks) Total for Question Four = 10 marks
TURN OVER Financial Management
7
September 2012
Question Five SR is a service-based entity, listed on its local stock exchange, which relies on its human resources to generate revenue. The directors believe that the information provided by the annual financial report fails to provide a complete picture of the resources available to the entity. They are keen to ensure that current and potential investors are aware of the investment the entity has made in its employees and are considering including a narrative report in respect of human capital.
Required: (a) Discuss, referring specifically to the recognition principles of the IASB’s Framework for the Preparation and Presentation of Financial Statements, why human resources cannot be recognised as an asset in the financial statements of SR. (3 marks)
(b) Discuss the pressures in the current economic climate to extend narrative reporting in corporate reports AND the potential advantages that could be gained by investors if SR included voluntary narrative disclosures specifically in respect of human capital. (4 marks)
(c) Discuss the potential drawbacks to investors of relying on voluntary disclosures as part of their investment appraisal. (3 marks) Total for Question Five = 10 marks
Total for Section A = 50 marks
End of Section A Section B starts on page 10
September 2012
8
Financial Management
This page is blank
Financial Management
9
September 2012
SECTION B – 50 MARKS [You are advised to spend no longer than 45 minutes on each question in this section.]
ANSWER BOTH QUESTIONS IN THIS SECTION – 25 MARKS EACH
Question Six The statements of financial position for AB and CD as at 30 June 2012 are provided below:
ASSETS Non-current assets Property, plant and equipment Available for sale investment (note 1) Current assets Inventories Receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Share capital ($1 equity shares) Retained earnings Other components of equity Total equity Non-current liabilities Current liabilities Total liabilities Total equity and liabilities
AB $000
CD $000
58,000 7,000 65,000
8,500 8,500
15,500 16,500 3,000 35,000 100,000
2,000 4,750 750 7,500 16,000
50,000 18,975 1,025 70,000
2,500 6,500 9,000
9,750 20,250 30,000 100,000
2,000 5,000 7,000 16,000
Additional information: 1.
AB acquired a 10% investment in CD on 1 February 2009 for $800,000. The investment was classified as available for sale with any associated gains or losses recorded within other components of equity in AB’s individual financial statements. On 1 January 2012, AB acquired an additional 60% of the equity share capital of CD at a cost of $5,175,000. The fair value of the original 10% investment at 1 January 2012 was $1,000,000. In its own financial statements, AB continues to hold the investment in CD as an available for sale asset and it is recorded at its fair value of $7,000,000 as at 30 June 2012. At 1 January 2012, the fair value of the net assets acquired was assessed to be the same as their carrying value, with one exception, property, plant and equipment (PPE). Property, with a carrying value of $3,200,000, had a fair value of $4,000,000. The remaining useful life of this asset is 10 years from the date of acquisition. Depreciation on PPE is charged on a monthly straight line basis.
2.
It is the group policy to value non-controlling interest at fair value at the date of acquisition. The fair value of the non-controlling interest at 1 January 2012 was $2,700,000.
3.
The profit for the year of CD was $2,500,000 and profits are assumed to accrue evenly throughout the year.
September 2012
10
Financial Management
4.
CD sold goods to AB for $1,000,000. Half of these goods remained in AB’s inventories at 30 June 2012. CD earns a 25% margin on all sales.
5.
Neither entity paid a dividend in the year ended 30 June 2012.
Required: (a) Prepare the consolidated statement of financial position as at 30 June 2012 for the AB Group. (20 marks)
AB purchased a further 10% of the ordinary share capital of CD on 1 July 2012 for $1,172,000.
Required: (b) (i) Explain how the acquisition of this additional investment will be accounted for in the consolidated financial statements of AB for the year to 30 June 2013. (ii) Prepare the journal entry that records the purchase of the additional 10% of CD’s share capital in the consolidated financial statements of AB. (5 marks) Total for Question Six = 25 marks
TURN OVER Financial Management
11
September 2012
Question Seven TYU is a listed entity that operates in a highly competitive market. A new entrant to this market (entered on 1 May 2011) has created pressure amongst the competitive entities by developing a marginally lower quality product and selling it at a lower price. The result has been a shift in market share to this new entrant in the last few months. You have been asked to review the financial performance and position of TYU for a large institutional investor who had identified TYU as a potential investment for 2012. TYU’s share price had fallen significantly due partly to a downturn in the stock market that TYU is listed on and partly to the poor interim results that TYU posted in November 2011. The share price recovered slightly following the announcement of a final dividend shortly before the year-end. The share price at 31 March 2012 was $2.50 (31 March 2011 $4.34). The financial statements for TYU are provided below:
Consolidated statement of financial position at 31 March ASSETS Non-current assets Property, plant and equipment Investment in associate Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital ($1 shares) Share premium Revaluation reserve (Note 4) Retained earnings (Note 3) Non-controlling interest Total equity Non-current liabilities Long-term borrowings (Note 1) Current liabilities Trade and other payables Short-term borrowings (Note 2) Total liabilities Total equity and liabilities
September 2012
12
2012 $m
2011 $m
393 21 414
353 24 377
210 118 328 742
110 103 24 237 614
20 67 20 278 385 24 409
20 67 298 385 19 404
90
90
196 47 243 333 742
120 120 210 614
Financial Management
Consolidated statement of comprehensive income for the year ended 31 March Revenue Cost of sales Gross profit Operating expenses Finance costs Share of (loss)/profit of associate Profit before tax Income tax expense Profit for the year Other comprehensive income Revaluation gains from property (net of tax) (Note 4) Total comprehensive income Profit for the year attributable to: Equity holders of the parent Non-controlling interest Total comprehensive income attributable to: Equity holders of the parent Non-controlling interest
2012 $m 678 (458) 220 (185) (19) (2) 14 (3) 11
2011 $m 618 (402) 216 (186) (8) 2 24 (7) 17
20 31
17
8 3 11
14 3 17
23 8 31
14 3 17
Notes: 1. The long-term borrowings are repayable in 2015. 2. TYU has a facility in place permitting short-term borrowings up to a maximum of $50 million. 3. TYU and its subsidiary both paid a dividend in the year.
4. TYU changed its group policy on Property, plant and equipment in the year to 31 March 2012 and now hold these assets at valuation.
Required: (a) Calculate the earnings per share AND the price/earnings ratio for TYU for the year ended 31 March 2012 and the comparatives for 2011. (2 marks)
(b) Analyse the financial performance and financial position of TYU and make a recommendation as to TYU’s suitability for investment based upon the information that has been presented to you. (6 marks are available for the calculation of relevant ratios which are additional to those calculated in part (a) above.) (20 marks)
(c) Discuss what post year-end information might be available that would provide your client with additional information before making an investment decision. (3 marks) Total for Question Seven = 25 marks
Total for Section B = 50 marks
End of Question Paper Maths Tables and Formulae are on pages 15 to 17
Financial Management
13
September 2012
This page is blank
September 2012
14
Financial Management
MATHS TABLES AND FORMULAE Present value table -n
Present value of $1, that is (1 + r) where r = interest rate; n = number of periods until payment or receipt. Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.853 0.844 0.836 0.828 0.820
2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.673
3% 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.623 0.605 0.587 0.570 0.554
4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.534 0.513 0.494 0.475 0.456
Interest rates (r) 5% 6% 0.952 0.943 0.907 0.890 0.864 0.840 0.823 0.792 0.784 0.747 0.746 0.705 0.711 0.665 0.677 0.627 0.645 0.592 0.614 0.558 0.585 0.527 0.557 0.497 0.530 0.469 0.505 0.442 0.481 0.417 0.458 0.394 0.436 0.371 0.416 0.350 0.396 0.331 0.377 0.312
7% 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.258
8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270 0.250 0.232 0.215
9% 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231 0.212 0.194 0.178
10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198 0.180 0.164 0.149
Periods (n) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
11% 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.188 0.170 0.153 0.138 0.124
12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104
13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125 0.111 0.098 0.087
14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108 0.095 0.083 0.073
Interest rates (r) 15% 16% 0.870 0.862 0.756 0.743 0.658 0.641 0.572 0.552 0.497 0.476 0.432 0.410 0.376 0.354 0.327 0.305 0.284 0.263 0.247 0.227 0.215 0.195 0.187 0.168 0.163 0.145 0.141 0.125 0.123 0.108 0.107 0.093 0.093 0.080 0.081 0.069 0.070 0.060 0.061 0.051
17% 0.855 0.731 0.624 0.534 0.456 0.390 0.333 0.285 0.243 0.208 0.178 0.152 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.043
18% 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.037
19% 0.840 0.706 0.593 0.499 0.419 0.352 0.296 0.249 0.209 0.176 0.148 0.124 0.104 0.088 0.079 0.062 0.052 0.044 0.037 0.031
20% 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065 0.054 0.045 0.038 0.031 0.026
Financial Management
15
September 2012
Cumulative present value of $1 per annum, Receivable or Payable at the end of each year for n years Periods (n) 1 2 3 4 5
1− (1+ r ) − n r
1% 0.990 1.970 2.941 3.902 4.853
2% 0.980 1.942 2.884 3.808 4.713
3% 0.971 1.913 2.829 3.717 4.580
4% 0.962 1.886 2.775 3.630 4.452
Interest rates (r) 5% 6% 0.952 0.943 1.859 1.833 2.723 2.673 3.546 3.465 4.329 4.212
7% 0.935 1.808 2.624 3.387 4.100
8% 0.926 1.783 2.577 3.312 3.993
9% 0.917 1.759 2.531 3.240 3.890
10% 0.909 1.736 2.487 3.170 3.791
6 7 8 9 10
5.795 6.728 7.652 8.566 9.471
5.601 6.472 7.325 8.162 8.983
5.417 6.230 7.020 7.786 8.530
5.242 6.002 6.733 7.435 8.111
5.076 5.786 6.463 7.108 7.722
4.917 5.582 6.210 6.802 7.360
4.767 5.389 5.971 6.515 7.024
4.623 5.206 5.747 6.247 6.710
4.486 5.033 5.535 5.995 6.418
4.355 4.868 5.335 5.759 6.145
11 12 13 14 15
10.368 11.255 12.134 13.004 13.865
9.787 10.575 11.348 12.106 12.849
9.253 9.954 10.635 11.296 11.938
8.760 9.385 9.986 10.563 11.118
8.306 8.863 9.394 9.899 10.380
7.887 8.384 8.853 9.295 9.712
7.499 7.943 8.358 8.745 9.108
7.139 7.536 7.904 8.244 8.559
6.805 7.161 7.487 7.786 8.061
6.495 6.814 7.103 7.367 7.606
16 17 18 19 20
14.718 15.562 16.398 17.226 18.046
13.578 14.292 14.992 15.679 16.351
12.561 13.166 13.754 14.324 14.878
11.652 12.166 12.659 13.134 13.590
10.838 11.274 11.690 12.085 12.462
10.106 10.477 10.828 11.158 11.470
9.447 9.763 10.059 10.336 10.594
8.851 9.122 9.372 9.604 9.818
8.313 8.544 8.756 8.950 9.129
7.824 8.022 8.201 8.365 8.514
11% 0.901 1.713 2.444 3.102 3.696
12% 0.893 1.690 2.402 3.037 3.605
13% 0.885 1.668 2.361 2.974 3.517
14% 0.877 1.647 2.322 2.914 3.433
Interest rates (r) 15% 16% 0.870 0.862 1.626 1.605 2.283 2.246 2.855 2.798 3.352 3.274
17% 0.855 1.585 2.210 2.743 3.199
18% 0.847 1.566 2.174 2.690 3.127
19% 0.840 1.547 2.140 2.639 3.058
20% 0.833 1.528 2.106 2.589 2.991
6 7 8 9 10
4.231 4.712 5.146 5.537 5.889
4.111 4.564 4.968 5.328 5.650
3.998 4.423 4.799 5.132 5.426
3.889 4.288 4.639 4.946 5.216
3.784 4.160 4.487 4.772 5.019
3.685 4.039 4.344 4.607 4.833
3.589 3.922 4.207 4.451 4.659
3.498 3.812 4.078 4.303 4.494
3.410 3.706 3.954 4.163 4.339
3.326 3.605 3.837 4.031 4.192
11 12 13 14 15
6.207 6.492 6.750 6.982 7.191
5.938 6.194 6.424 6.628 6.811
5.687 5.918 6.122 6.302 6.462
5.453 5.660 5.842 6.002 6.142
5.234 5.421 5.583 5.724 5.847
5.029 5.197 5.342 5.468 5.575
4.836 4.988 5.118 5.229 5.324
4.656 7.793 4.910 5.008 5.092
4.486 4.611 4.715 4.802 4.876
4.327 4.439 4.533 4.611 4.675
16 17 18 19 20
7.379 7.549 7.702 7.839 7.963
6.974 7.120 7.250 7.366 7.469
6.604 6.729 6.840 6.938 7.025
6.265 6.373 6.467 6.550 6.623
5.954 6.047 6.128 6.198 6.259
5.668 5.749 5.818 5.877 5.929
5.405 5.475 5.534 5.584 5.628
5.162 5.222 5.273 5.316 5.353
4.938 4.990 5.033 5.070 5.101
4.730 4.775 4.812 4.843 4.870
Periods (n) 1 2 3 4 5
September 2012
16
Financial Management
FORMULAE Annuity Present value of an annuity of $1 per annum receivable or payable for n years, commencing in one year, discounted at r% per annum:
PV =
1 1 1 − r [1 + r ]n
Perpetuity Present value of $1 per annum receivable or payable in perpetuity, commencing in one year, discounted at r% per annum: PV =
1 r
Growing Perpetuity Present value of $1 per annum, receivable or payable, commencing in one year, growing in perpetuity at a constant rate of g% per annum, discounted at r% per annum: PV =
Financial Management
1 r −g
17
September 2012
This page is blank
September 2012
18
Financial Management
LIST OF VERBS USED IN THE QUESTION REQUIREMENTS A list of the learning objectives and verbs that appear in the syllabus and in the question requirements for each question in this paper. It is important that you answer the question according to the definition of the verb. LEARNING OBJECTIVE Level 1 - KNOWLEDGE What you are expected to know.
Level 2 - COMPREHENSION What you are expected to understand.
VERBS USED
DEFINITION
List State Define
Make a list of Express, fully or clearly, the details/facts of Give the exact meaning of
Describe Distinguish Explain
Communicate the key features Highlight the differences between Make clear or intelligible/State the meaning or purpose of Recognise, establish or select after consideration Use an example to describe or explain something
Identify Illustrate Level 3 - APPLICATION How you are expected to apply your knowledge.
Apply Calculate Demonstrate
Put to practical use Ascertain or reckon mathematically Prove with certainty or to exhibit by practical means Make or get ready for use Make or prove consistent/compatible Find an answer to Arrange in a table
Prepare Reconcile Solve Tabulate Level 4 - ANALYSIS How are you expected to analyse the detail of what you have learned.
Level 5 - EVALUATION How are you expected to use your learning to evaluate, make decisions or recommendations.
Financial Management
Analyse Categorise Compare and contrast Construct Discuss Interpret Prioritise Produce
Examine in detail the structure of Place into a defined class or division Show the similarities and/or differences between Build up or compile Examine in detail by argument Translate into intelligible or familiar terms Place in order of priority or sequence for action Create or bring into existence
Advise Evaluate Recommend
Counsel, inform or notify Appraise or assess the value of Advise on a course of action
19
September 2012
Financial Pillar
Management Level Paper
F2 – Financial Management
September 2012
Saturday
September 2012
20
Financial Management