CAP 2 SFMA Case study

mick_989 · 11-01-2015 02:54PM

Hey guys,

Would someone be able to send me the big 4 notes for the case study

Would really appreciate it

thanks

CAz93 · 11-01-2015 03:10PM

Hey,

I would also appreciate any notes people got from big4.

many thanks

davpmn89 · 11-01-2015 05:34PM

Hey guys I'd appreciate big 4 notes also.

I can send what I have to date in return if anyone is interested?

mick_989 · 11-01-2015 05:51PM

claireon88 wrote: »

With regard to the computation of the indicative cash flow, with above comments are you guys thinking we should be using a relevent costing approach, so not including the costs that will arise either way, wages etc, including a cost saving of all outgoings in the 3 year plan and the income of the 3 year plan as a opportunity cost?
I'm thinking when doing the cash flow not to use a relevant costing approach and instead prepare a simple cash flow, what will come in and what will be spent to what we have left over at the end of the year, like preparing a budget?

What is everyone thinking of doing in terms of computing cash flow?

that's what I was thinking, not just relevant costs. to put in all costs.

I'm not sure if I calculated it incorrectly but for the 1 year plan it looks like the net cash flow is already below €1,500,000 and that's before taking off the pension amount, when we get them. Has anyone else got this?

Wee_T · 11-01-2015 05:58PM

mick_989 wrote: »

that's what I was thinking, not just relevant costs. to put in all costs.

I'm not sure if I calculated it incorrectly but for the 1 year plan it looks like the net cash flow is already below €1,500,000 and that's before taking off the pension amount, when we get them. Has anyone else got this?

I have got this also. I am sitting with a CF of £1,272,193?? Also by my calculations the 3 year option is miles above the NPV of £5,000,000. Although pension will go in and rental income change. Anyone else got this?

Also I can send the big 4 notes for anyone who needs them? Let me know the best way to send it.

Dublin Student1992 · 11-01-2015 05:59PM

mick_989 wrote: »

that's what I was thinking, not just relevant costs. to put in all costs.

I'm not sure if I calculated it incorrectly but for the 1 year plan it looks like the net cash flow is already below €1,500,000 and that's before taking off the pension amount, when we get them. Has anyone else got this?

Ye, the net cash flow generate from option 1 will defiently be below the requirement of €1.5 million, so option 2 will have to be persued!

With regards to relevant costing- the case study just asks us to compute a simple net cash flow calculation. However, I've prepared a relevant costing cash flow calc for option 1 just incase we've asked to do this in the exam- just to save time.

Wee_T · 11-01-2015 06:01PM

Is anyone else worried that there is very little management accounting in this case study? Seems finance based? At ideas on any management areas I'm missing? Possible theory on balance scorecard as they pay cleaners a lot more than competitors??

mick_989 · 11-01-2015 06:10PM

Wee_T wrote: »

I have got this also. I am sitting with a CF of £1,272,193?? Also by my calculations the 3 year option is miles above the NPV of £5,000,000. Although pension will go in and rental income change. Anyone else got this?

Also I can send the big 4 notes for anyone who needs them? Let me know the best way to send it.

I've currently got €1,272,193 as well and its just the pension to go in I think. I assume this is just a simple cashflow, not need to discount back to T0 either.

Wee_T · 11-01-2015 06:18PM

Dublin Student1992 wrote: »

Ye, the net cash flow generate from option 1 will defiently be below the requirement of €1.5 million, so option 2 will have to be persued!

With regards to relevant costing- the case study just asks us to compute a simple net cash flow calculation. However, I've prepared a relevant costing cash flow calc for option 1 just incase we've asked to do this in the exam- just to save time.

I hadnt thought about relevant costs, us there many differences in your two calcs? Most look relevant?

Wee_T · 11-01-2015 06:20PM

mick_989 wrote: »

I've currently got €1,272,193 as well and its just the pension to go in I think. I assume this is just a simple cashflow, not need to discount back to T0 either.

That's what I thought. Is your option 2 looking above the requirement? You prepared any theory answers

Wee_T · 11-01-2015 06:23PM

galwaygent wrote: »

Also, does anybody know where Deloitte are getting their figure of €79,168 from for Lough Erne??
I worked out (3/12*€50,000) is €12,500
Redundancy is (4 months * (50K/12)) =€4167.
total cost is €29167.

They seem to have added in an extra €50K

Dublin Student1992 · 11-01-2015 06:28PM

Wee_T wrote: »

I hadnt thought about relevant costs, us there many differences in your two calcs? Most look relevant?

I just computed a scenario where the co. continues as is compared to if the co. went ahead with option one.

Main cost/savings are: the new increase in price per week (difference between old an new), increase in pension costs, difference in repairs, exit penalty, redundancy costs, sales on FA and so on...

Unlikely it will come up, but just looking for ideas where the mgt side might come in!

mick_989 · 11-01-2015 06:36PM

Wee_T wrote: »

That's what I thought. Is your option 2 looking above the requirement? You prepared any theory answers

Did you just make up a discount rate for now? Did you put and estimation in for the rentals as this will contribute massively to the outcome.

the thing I think need to be filled in on the 3 year plan are the rental income from boats, pension costs, casual cleaning staff costs, and I assume there will be some finance costs with the loan? are these all the thing you've got to be filled in?

also I've pm'd you my e-mail address if you could please send on the big 4 notes, thanks.

Wee_T · 12-01-2015 12:31AM

mick_989 wrote: »

Did you just make up a discount rate for now? Did you put and estimation in for the rentals as this will contribute massively to the outcome.

the thing I think need to be filled in on the 3 year plan are the rental income from boats, pension costs, casual cleaning staff costs, and I assume there will be some finance costs with the loan? are these all the thing you've got to be filled in?

also I've pm'd you my e-mail address if you could please send on the big 4 notes, thanks.

Yes I used the rental Income as if it's maxed ie 100% of boats rented out. It will change when we get then demand/no of boats. But I've highlighted it to change. Pension costs I again highlighted to be changed but used the original 48K and said 24 for mgrs and 24 for dan and wife. Then obv used the months for mgrs and reduced the directors by 40%. Again this will change. I just wanted an idea of what way it was looking.

And cleaning costs will change again with the no of boats rented that will need cleaned. I put 100% of boats for this for now. Just rough though. And yes possible finance on the day.

mick_989 · 12-01-2015 10:47AM

Wee_T wrote: »

Yes I used the rental Income as if it's maxed ie 100% of boats rented out. It will change when we get then demand/no of boats. But I've highlighted it to change. Pension costs I again highlighted to be changed but used the original 48K and said 24 for mgrs and 24 for dan and wife. Then obv used the months for mgrs and reduced the directors by 40%. Again this will change. I just wanted an idea of what way it was looking.

And cleaning costs will change again with the no of boats rented that will need cleaned. I put 100% of boats for this for now. Just rough though. And yes possible finance on the day.

I was aondering because I had the NPV lower than the €5m, but then I noticed that I only put in rentals for year 3 and forgot year 1 and 2. After putting them in now its way over the €5m.

mick_989 · 12-01-2015 10:51AM

Wee_T wrote: »

Yes I used the rental Income as if it's maxed ie 100% of boats rented out. It will change when we get then demand/no of boats. But I've highlighted it to change. Pension costs I again highlighted to be changed but used the original 48K and said 24 for mgrs and 24 for dan and wife. Then obv used the months for mgrs and reduced the directors by 40%. Again this will change. I just wanted an idea of what way it was looking.

And cleaning costs will change again with the no of boats rented that will need cleaned. I put 100% of boats for this for now. Just rough though. And yes possible finance on the day.

I was wondering because I had the NPV lower than the €5m, but then I noticed that I only put in rentals for year 3 and forgot year 1 and 2. After putting them in now its way over the €5m.

jus_tin4 · 12-01-2015 01:49PM

i think management will come in on the resource management system, seems to me like the most obvious point! there is only so many things that really stick out, like prior case studies.... i think the fx rate and the resource are it imo anyways!

the only reason i could see option one being taking is for the fact that it has less problems associated with it.. i.e not moving to a new location with loss of goodwill, other competitors in the area or another co. just taking their prior docks.

option 2 has more risk towards the company, i.e. now in a loan(what length are they paying it of in, int charge, fx change, are they going to hedge)

there is management areas such as sourcing cleaners, is the manager involved in the decision or is it all board based decisions etc...

I think there is a lot of areas to go down into in both finance and management, just depends how you see it and consider relevant imo.

also think its going to be a report/memo so might not be a bad idea to know the layout of that just in case!

thats my plan for this! FR is a different animal! good luck!

Dublin Student1992 · 12-01-2015 08:09PM

jus_tin4 wrote: »

i think management will come in on the resource management system, seems to me like the most obvious point! there is only so many things that really stick out, like prior case studies.... i think the fx rate and the resource are it imo anyways!

the only reason i could see option one being taking is for the fact that it has less problems associated with it.. i.e not moving to a new location with loss of goodwill, other competitors in the area or another co. just taking their prior docks.

option 2 has more risk towards the company, i.e. now in a loan(what length are they paying it of in, int charge, fx change, are they going to hedge)

there is management areas such as sourcing cleaners, is the manager involved in the decision or is it all board based decisions etc...

I think there is a lot of areas to go down into in both finance and management, just depends how you see it and consider relevant imo.

also think its going to be a report/memo so might not be a bad idea to know the layout of that just in case!

thats my plan for this! FR is a different animal! good luck!

Properly a silly question- but what do you mean by hedge?

Wee_T · 12-01-2015 09:15PM

jus_tin4 wrote: »

i think management will come in on the resource management system, seems to me like the most obvious point! there is only so many things that really stick out, like prior case studies.... i think the fx rate and the resource are it imo anyways!

the only reason i could see option one being taking is for the fact that it has less problems associated with it.. i.e not moving to a new location with loss of goodwill, other competitors in the area or another co. just taking their prior docks.

option 2 has more risk towards the company, i.e. now in a loan(what length are they paying it of in, int charge, fx change, are they going to hedge)

there is management areas such as sourcing cleaners, is the manager involved in the decision or is it all board based decisions etc...

I think there is a lot of areas to go down into in both finance and management, just depends how you see it and consider relevant imo.

also think its going to be a report/memo so might not be a bad idea to know the layout of that just in case!

thats my plan for this! FR is a different animal! good luck!

Hi,

What do you mean by resource management system? Struggling to remember my CAP1 managements. Thanks

Aurellia · 12-01-2015 09:32PM

Dublin Student1992 wrote: »

Properly a silly question- but what do you mean by hedge?

Means to transfer a risky cash flow to a risk free or risk reduced one, by buying up the assets or paper assets as to make profit and reduce the risk of interest and fx rates changing. The FX on Swedish Krona will have affect on Income and the American dollar is what drives sales income ( Depending on Bobs report but would seem its all american by Visitors log)

mick_989 · 12-01-2015 10:13PM

Wee_T wrote: »

Hi,

What do you mean by resource management system? Struggling to remember my CAP1 managements. Thanks

on the bottom of the first page of the material, they call their booking system a resource management system, I assume that's what he means. its keeps crashing so is a risk to the business.

jus_tin4 · 12-01-2015 11:35PM

From googling and askingb around resource systems is basically to help identify issues in a timely fashion such as a double booking( couldn't remebrr it either) and with an old system that occasionally crashing I'm presuming it doesn't have this capability....

Let me know if you disagree, sorta came up with most of the issues pretty quick, but it's being getting the theory/ accounting reasoning that took me the longest!

BMW22 · 13-01-2015 04:43PM

galwaygent wrote: »

I was going to use the €1500 for peak and €1200 for off peak... It is confusing however, as they expect the same sales for a higher price. However, they also expect the same sales if they charge €960 for the off peak season. Surely the the c.50% difference in price would attract a lot more customers for the off peak season??

I am putting the sale of cruisers in Y0.
The purchase in Y1 as its not "today".
I would put the lease exit plan in Y0 as it is on the year end.

Just my thinking, open to correction!!

Does the cost of the new investment not always come out in year 0?

Also wondering where does the €3 million come in that they will be selling the business for? Is this an inflow in year 3 or 4??

mick_989 · 13-01-2015 05:54PM

BMW22 wrote: »

Does the cost of the new investment not always come out in year 0?

Also wondering where does the €3 million come in that they will be selling the business for? Is this an inflow in year 3 or 4??

It depends on when they buy the boats, it says they need to be bought by March. if they are bought in March I assume it would go in Year 1, if they buy them on 1st October then Year 0. it'll depend on what the extra info says on the day. thats what I was thinking anyway.

I was going to put the sale of business for €3m in Year 3, unless it says something else in the info on the day that would suggest otherwise.

BMW22 · 13-01-2015 11:01PM

Has any1 got notes from Big4? Would really appreciate it

Aurellia · 14-01-2015 02:53PM

What else are people preparing ?
I've done hedging with Future contract and the discount and premium with them

Not sure what areas of MA to go over as seems a very Finance paper ??

Wee_T · 16-01-2015 08:42PM

Aurellia wrote: »

What else are people preparing ?
I've done hedging with Future contract and the discount and premium with them

Not sure what areas of MA to go over as seems a very Finance paper ??

Hi could you help me with this area. I struggle with hedging, so not too sure what to prepare. Also for anyone who wants the BIG 4 notes nails me now and I will forward onto you. Thanks

jus_tin4 · 16-01-2015 10:55PM

Wee_T wrote: »

Hi could you help me with this area. I struggle with hedging, so not too sure what to prepare. Also for anyone who wants the BIG 4 notes nails me now and I will forward onto you. Thanks

i can't see being asked to calculate the hedging( just my opinion, i haven't thought about a calc and not at this stage) id say its a part that might be brought in on a recommendation type thing, and the main one for me would be future contracts

good luck to everyone tomorrow

CAP 2 SFMA Case study

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