F3 – financial strategy - the examiner's answers - November 2010

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The Examiner's Answers – F3 - Financial Strategy Some of the answers that follow are fuller and more comprehensive than would be expected from a well-prepared candidate. They have been written in this way to aid teaching, study and revision for tutors and candidates alike.

SECTION A Answer to Question One (a) Forecast net cash flow Base data 2011 D$m

2012 D$m

2013 D$m

11.23

12.26 (=11.23x1.05x1.04)

13.77 (=12.26x1.08 x1.04)

3.51

4.05 (= 3.51x1.05x1.10)

4.81 (= 4.05x1.08x1.10)

8.66

9.27 (= 8.66 x 1.07)

9.92 (= 9.27 x 1.07)

23.40 20.45 (=25.45 –5) 2.95

25.58 21.27 (= 20.45 x 1.04) 4.31

28.50 22.12 (= 21.27 x 1.04) 6.38

0.12

0.21

(1.59)

(1.59)

(1.47)

(1.38)

2.84 (0.85) 0.23

5.00 (1.50) 0.17

2.22

3.67

Year ended 30 June: Aviation income (flex by increase in passengers and also uplift by 4% pa) Car parking (flex by increase in passengers and also uplift by 10% pa) Other income, including retail concessions (apply increase of 7% pa) Total income Operating costs after deducting depreciation of D$5million Net operating cash flow Interest receivable on cash at 4% (see W2) Interest payable on borrowings at 7% (unchanged) Net finance costs Net cash flow after interest but before tax Tax at 30% Add tax relief on tax depreciation allowances (see W1) Estimated net cash flow for the year

Financial Strategy

1

November 2010


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F3 – financial strategy - the examiner's answers - November 2010 by Chartered Institute of Management Accountants - Issuu