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