(ii) Briefly discuss THREE disadvantages of using EVA? in the measurement of financial performance.(3 marks)
(ii) Briefly discuss THREE disadvantages of using EVA? in the measurement of financial performance.
(3 marks)
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2 (a) Discuss the nature of the financial objectives that may be set in a not-for-profit organisation such as a charityor a hospital. (8 marks)
(c) Discuss the ways in which budgets and the budgeting process can be used to motivate managers toendeavour to meet the objectives of the company. Your answer should refer to:(i) setting targets for financial performance;(ii) participation in the budget-setting process. (12 marks)
(e) Briefly provide five reasons to the management of Bailey’s why financial rewards could be considered to improve motivation. (5 marks)
6 Communication is important for all organisations and requires an understanding of communication flows and channels.Required:(a) Briefly explain the main purposes of the three main formal communication channels in an organisation:(i) Downwards; (3 marks)
(b) What are the advantages and disadvantages of using franchising to develop La Familia Amable budget hotelchain? (8 marks)
5 Ambush, a public limited company, is assessing the impact of implementing the revised IAS39 ‘Financial Instruments:Recognition and Measurement’. The directors realise that significant changes may occur in their accounting treatmentof financial instruments and they understand that on initial recognition any financial asset or liability can bedesignated as one to be measured at fair value through profit or loss (the fair value option). However, there are certainissues that they wish to have explained and these are set out below.Required:(a) Outline in a report to the directors of Ambush the following information:(i) how financial assets and liabilities are measured and classified, briefly setting out the accountingmethod used for each category. (Hedging relationships can be ignored.) (10 marks)
(b) (i) Discuss the main factors that should be taken into account when determining how to treat gains andlosses arising on tangible non-current assets in a single statement of financial performance. (8 marks)
5 Financial statements have seen an increasing move towards the use of fair values in accounting. Advocates of ‘fairvalue accounting’ believe that fair value is the most relevant measure for financial reporting whilst others believe thathistorical cost provides a more useful measure.Issues have been raised over the reliability and measurement of fair values, and over the nature of the current levelof disclosure in financial statements in this area.Required:(a) Discuss the problems associated with the reliability and measurement of fair values and the nature of anyadditional disclosures which may be required if fair value accounting is to be used exclusively in corporatereporting. (13 marks)
(b) Discuss how management’s judgement and the financial reporting infrastructure of a country can have asignificant impact on financial statements prepared under IFRS. (6 marks)Appropriateness and quality of discussion. (2 marks)
Required:Discuss the principles and practices which should be used in the financial year to 30 November 2008 to accountfor:(b) the costs incurred in extending the network; (7 marks)
(b) Discuss the relative costs to the preparer and benefits to the users of financial statements of increaseddisclosure of information in financial statements. (14 marks)Quality of discussion and reasoning. (2 marks)
(b) Discuss the relevance of each of the following actions as steps in trying to remedy performance measurementproblems relating to the ‘365 Sports Complex’ and suggest examples of specific problem classifications thatmay be reduced or eliminated by each action:(i) Focusing on and improving the measurement of customer satisfaction(ii) Involving staff at all levels in the development and implementation of performance measures(iii) Being flexible in the extent to which formal performance measures are relied on(iv) Giving consideration to the auditing of the performance measurement system. (8 marks)
(c) Excluding the number of complaints by patients, identify and briefly explain THREE quantitativenon-financial performance measures that could be used to assess the ‘quality of service’ provided by theDental Health Partnership. (3 marks)
(ii) Briefly discuss FOUR non-financial factors which might influence the above decision. (4 marks)
(e) Briefly discuss FOUR initiatives that management might consider in order to further enhance profitability.(4 marks)
(ii) Comment briefly on the use of its own tree plantations as a source of raw materials by Our Timbers Ltd.(3 marks)
(ii) Briefly discuss TWO factors which could reduce the rate of return earned by the investment as per theresults in part (a). (4 marks)
(c) Explain the term ‘target costing’ and how it may be applied by GWCC. Briefly discuss any potentiallimitations in its application. (8 marks)
(ii) Briefly explain the extent to which the application of sensitivity analysis might be useful in decidingwhich refrigeration system to purchase and discuss the limitations inherent in its use. (3 marks)
(b) Briefly discuss how stakeholder groups (other than management and employees) may be rewarded for ‘good’performance. (4 marks)
(b) Using the information contained in Appendix 1.1, discuss the financial performance of HLP and MAS,incorporating details of the following in your discussion:(i) Overall client fees (total and per consultation)(ii) Advisory protection scheme consultation ‘utilisation levels’ for both property and commercial clients(iii) Cost/expense levels. (10 marks)
(c) Briefly discuss why the directors of HFL might choose contract D irrespective of whether or not contract Dwould have been selected using expected values as per part (a). (2 marks)
(ii) Briefly explain the implications of Parr Co’s audit opinion for your audit opinion on the consolidatedfinancial statements of Cleeves Co for the year ended 30 September 2006. (3 marks)
3 (a) Financial statements often contain material balances recognised at fair value. For auditors, this leads to additionalaudit risk.Required:Discuss this statement. (7 marks)
(b) (i) Discuss the relationship between the concepts of ‘business risk’ and ‘financial statement risk’; and(4 marks)
JJG Co is planning to raise $15 million of new finance for a major expansion of existing business and is considering a rights issue, a placing or an issue of bonds. The corporate objectives of JJG Co, as stated in its Annual Report, are to maximise the wealth of its shareholders and to achieve continuous growth in earnings per share. Recent financial information on JJG Co is as follows:Required:(a) Evaluate the financial performance of JJG Co, and analyse and discuss the extent to which the company has achieved its stated corporate objectives of:(i) maximising the wealth of its shareholders;(ii) achieving continuous growth in earnings per share.Note: up to 7 marks are available for financial analysis.(12 marks)(b) If the new finance is raised via a rights issue at $7·50 per share and the major expansion of business hasnot yet begun, calculate and comment on the effect of the rights issue on:(i) the share price of JJG Co;(ii) the earnings per share of the company; and(iii) the debt/equity ratio. (6 marks)(c) Analyse and discuss the relative merits of a rights issue, a placing and an issue of bonds as ways of raising the finance for the expansion. (7 marks)