UNIVERSITY OF BRISTOL

EXAMINATION FOR DEGREES IN THE SCHOOL OF ACCOUNTING AND FINANCE

August / September 2021

UNIT CODE: EFIM10030

UNIT NAME: Accounting and Finance for Managers

Start Time: am BST (UTC+01:00)

End Time: pm BST (UTC+01:00)
Time allowed: 3 HOURS
Additional time for submission: ONE HOUR (to x time GMT)

Students with agreed additional time will have that added in the usual way,

There are NINE questions in this Examination Paper

Candidates should attempt ALL questions.

The marks per-question is indicated in brackets.

Candidates must show the basis of all calculations.

IMPORTANT INSTRUCTIONS FOR THE ONLINE EXAM

 Answers must be typed and submitted using the ‘Exam front sheet’ Microsoft Word document provided. There is a
file size limit of 100 MB. Only one document can be submitted.
 Please clearly indicate the questions you are attempting on your submitted answer.
 This is an open-book exam. You may access your lecture materials and revision notes, textbooks, Blackboard, the
online University Library, and other online resources. Your work must be your own: you must not contact anyone
or work with anyone. You also must not share this paper with anyone.
 If necessary, mathematical formulae and calculations can be handwritten and scanned into the document; written-
response questions must be answered by typing
 Word tables can be used for calculations if full workings are shown.
 All answers will be subjected to originality checks.
Beltane Ltd.: Questions

Answer ALL of the following with reference to the case material that has been provided.

Question 1

i. Calculate the gearing ratio of Beltane Ltd. as at 31 st December 2020. State the share ownership percentages of
each of the two founding members (Philip and Theresa) as at 31st December 2020.
(2 marks)

ii. The case states that £1.5m is sought for expansion and that this might be achieved via either ‘Option A’ or
‘Option B’. Calculate, for both options:

a. The revised gearing ratio

b. The ownership percentages of the two founding members
(6 marks)
iii. Calculate the ‘interest cover’:

a. As at 31st December 2020

b. When Option B is implemented (and under the assumption that profit before interest remains the same)
(3 marks)

iv. Use your answers to a), b) and c) above to advise Philip and Theresa on the merits (or drawbacks) of each
option (‘A’ and ‘B’).
(4 marks)

Question 2

Use the information in figure 2 to calculate the maximum dividend per share it is possible for Hopperton to declare at 31 st
December 2020. Advise the Directors as-to the wisdom of declaring the maximum possible dividend.
(8 marks)

Question 3

The case states that the premises could be bought for £1.6m. The Statement of Financial Position shows that cash of £600k is
currently available to the firm. Explain why the Directors wish to raise £1.5m, instead of simply raising £1m and using the
cash for the remainder of the money required.
(5 marks)
Question 4

The opening paragraph of the case material states that Philip and Theresa decided to form a Private Limited Liability
Company. Suggest and explain three factors they would have considered in coming to this decision.
(6 marks)

Question 5

Use the information in figures 1 and 2, plus the following additional information to calculate:

The rate of inventory turnover (stock turnover)

The creditor payment period
The debt collection period
The current ratio
The acid test ratio

Use the additional information for your calculations:

 all sales made during 2020 were on a credit basis.

 the total credit purchases made during 2020 amounted to is £1,360k

 the value of inventory held at 1st January 2020 was £490k

(8 marks)

Question 6

Use your answers to question five in order to make a comparison with the ratios provided for Samhain Ltd. (see figure 3).
Do not attempt to adjust figures for any differences in accounting policies. Which company shows the better financial
performance and / or position, and why?

(8 marks)

Question 7

i. With regard to the fixtures and fittings bought by each company (Beltane and Samhain) on 1st Jan 2018,
calculate (to the nearest £k):

a. The net book value as at 31st December 2020

b. The depreciation charge for the year ended 31st December 2020.
(4 marks)

ii. With regard to the accounting policies (on depreciation) adopted by each firm:

a. Explain the phrase ‘accounting policy’.

b. Explain the relevance of the consistency concept when applied to accounting policies.
c. Which company has adopted the more ‘prudent’ policy?
(6 marks)

iii. Explain what criteria would be used by the Auditors of Beltane Ltd. when making a judgement on that
Company’s accounting policy on depreciation.
(3 marks)

Question 8

Explain the limitations of the current budgetary system in use at Beltane. Use the figures in figure 4 to help illustrate your
answer.

Your answer should make some reference as to whether the Taunton store should be closed if it returns a loss for a second
successive year.

(16 marks)

QUESTIONS CONINUE OVERLEAF

Question 9

a) Use the forecast of future earnings prepared by Tony Hands (figure 5) in order to arrive at a valuation of one
Beltane ordinary share. For the purposes of this calculation you should assume that it is now 1 st January 2021, and
you should assume a cost of capital of 14%.

The following extract is from the net present value tables of £1 for a discount factor of 14%.

No. of years from Discount Factor for

01.01.2021 14%

1 0.877
2 0.770
3 0.675
4 0.592
5 0.519

(10 marks)

b) Use the information in the Statement of Financial Position (figure 1) to arrive at another valuation of one Beltane
ordinary share.

(2 marks)

c) Outline the merits and drawbacks of each approach to share valuation that have been used in parts a) and b) above.
(8 marks)

Total for the paper: 100 marks

END OF EXAMINATION PAPER

UNIVERSITY OF BRISTOL
EXAMINATION FOR DEGREES IN THE SCHOOL OF ACCOUNTING AND FINANCE

August / September 2021

UNIT CODE: EFIM10030

UNIT NAME: Accounting and Finance for Managers

Start Time: am BST (UTC+01:00)

End Time: pm BST (UTC+01:00)
Time allowed: 3 HOURS
Additional time for submission: ONE HOUR (to x time GMT)

Students with agreed additional time will have that added in the usual way,

There are NINE questions in this Examination Paper

Candidates should attempt ALL questions.

The marks per-question is indicated in brackets.

Candidates must show the basis of all calculations.

 IMPORTANT INSTRUCTIONS FOR THE ONLINE EXAM

 Answers must be typed and submitted using the ‘Exam front sheet’ Microsoft Word
document provided. There is a file size limit of 100 MB. Only one document can be
submitted.
 Please clearly indicate the questions you are attempting on your submitted answer.
 This is an open-book exam. You may access your lecture materials and revision notes,
textbooks, Blackboard, the online University Library, and other online resources. Your work
must be your own: you must not contact anyone or work with anyone. You also must
not share this paper with anyone.
 If necessary, mathematical formulae and calculations can be handwritten and scanned into
the document; written-response questions must be answered by typing
 Word tables can be used for calculations if full workings are shown.
 All answers will be subjected to originality checks.
Beltane Ltd.: Questions

Answer ALL of the following with reference to the case material that has been provided.

Question 1

v. Calculate the gearing ratio of Beltane Ltd. as at 31st December 2020. State the share
ownership percentages of each of the two founding members (Philip and Theresa) as at 31st
December 2020.
(4 marks)

vi. The case states that £1.5m is sought for expansion and that this might be achieved via either
‘Option A’ or ‘Option B’. Calculate, for both options:

c. The revised gearing ratio

d. The ownership percentages of the two founding members
(7 marks)
vii. Calculate the ‘interest cover’:

c. As at 31st December 2020

d. When Option B is implemented (and under the assumption that profit before interest remains
the same)
(5 marks)

viii. Use your answers to a), b) and c) above to advise Philip and Theresa on the merits (or
drawbacks) of each option (‘A’ and ‘B’).
(4 marks)

Question 2

Use the information in figure 2 to calculate the maximum dividend per share it is possible for Hopperton to
declare at 31st December 2020. Advise the Directors as-to the wisdom of declaring the maximum possible
dividend.
(8 marks)

Question 3

The case states that the premises could be bought for £1.6m. The Statement of Financial Position shows
that cash of £600k is currently available to the firm. Explain why the Directors wish to raise £1.5m, instead
of simply raising £1m and using the cash for the remainder of the money required.
(5 marks)
Question 4

The opening paragraph of the case material states that Philip and Theresa decided to form a Private
Limited Liability Company. Suggest and explain three factors they would have considered in coming to
this decision.
(6 marks)

Question 5

Use the information in figures 1 and 2, plus the following additional information to calculate:

The rate of inventory turnover (stock turnover)

The creditor payment period
The debt collection period
The current ratio
The acid test ratio

Use the additional information for your calculations:

 all sales made during 2020 were on a credit basis.

 the total credit purchases made during 2020 amounted to is £1,360k

 the value of inventory held at 1st January 2020 was £490k

(8 marks)

Question 6

Use your answers to question five in order to make a comparison with the ratios provided for Samhain Ltd.
(see figure 3). Do not attempt to adjust figures for any differences in accounting policies. Which company
shows the better financial performance and / or position, and why?

(8 marks)

Question 7

iv. With regard to the fixtures and fittings bought by each company (Beltane and Samhain) on 1st
Jan 2018, calculate (to the nearest £k):

c. The net book value as at 31st December 2020

d. The depreciation charge for the year ended 31st December 2020.
(4 marks)

v. With regard to the accounting policies (on depreciation) adopted by each firm:

d. Explain the phrase ‘accounting policy’.

e. Explain the relevance of the consistency concept when applied to accounting policies.
f. Which company has adopted the more ‘prudent’ policy?
(6 marks)

vi. Explain what criteria would be used by the Auditors of Beltane Ltd. when making a
judgement on that Company’s accounting policy on depreciation.
(3 marks)
Question 8

Explain the limitations of the current budgetary system in use at Beltane. Use the figures in figure 4 to help
illustrate your answer.

Your answer should make some reference as to whether the Taunton store should be closed if it returns a
loss for a second successive year.

(16 marks)

QUESTIONS CONINUE OVERLEAF

Question 9

d) Use the forecast of future earnings prepared by Tony Hands (figure 5) in order to arrive at a
valuation of one Beltane ordinary share. For the purposes of this calculation you should assume
that it is now 1st January 2021, and you should assume a cost of capital of 14%.

The following extract is from the net present value tables of £1 for a discount factor of 14%.

No. of Discount
years from Factor for
01.01.2021 14%
1 0.877
2 0.770
3 0.675
4 0.592
5 0.519

(10 marks)

e) Use the information in the Statement of Financial Position (figure 1) to arrive at another valuation
of one Beltane ordinary share.

(2 marks)

f) Outline the merits and drawbacks of each approach to share valuation that have been used in parts
a) and b) above.
(8 marks)

Total for the paper: 100 marks

END OF EXAMINATION PAPER

UNIVERSITY OF BRISTOL
EXAMINATION FOR DEGREES IN THE SCHOOL OF ACCOUNTING AND FINANCE

August / September 2021

UNIT CODE: EFIM10030

UNIT NAME: Accounting and Finance for Managers

Start Time: am BST (UTC+01:00)

End Time: pm BST (UTC+01:00)
Time allowed: 3 HOURS
Additional time for submission: ONE HOUR (to x time GMT)

Students with agreed additional time will have that added in the usual way,

There are NINE questions in this Examination Paper

Candidates should attempt ALL questions.

The marks per-question is indicated in brackets.

Candidates must show the basis of all calculations.

IMPORTANT INSTRUCTIONS FOR THE ONLINE EXAM

 Answers must be typed and submitted using the ‘Exam front sheet’ Microsoft Word
document provided. There is a file size limit of 100 MB. Only one document can be
submitted.
 Please clearly indicate the questions you are attempting on your submitted answer.
 This is an open-book exam. You may access your lecture materials and revision notes,
textbooks, Blackboard, the online University Library, and other online resources. Your work
must be your own: you must not contact anyone or work with anyone. You also must
not share this paper with anyone.
 If necessary, mathematical formulae and calculations can be handwritten and scanned into
the document; written-response questions must be answered by typing
 Word tables can be used for calculations if full workings are shown.
 All answers will be subjected to originality checks.
Beltane Ltd.: Questions

Answer ALL of the following with reference to the case material that has been provided.

Question 1

ix. Calculate the gearing ratio of Beltane Ltd. as at 31st December 2020. State the share
ownership percentages of each of the two founding members (Philip and Theresa) as at 31st
December 2020.
(6 marks)

x. The case states that £1.5m is sought for expansion and that this might be achieved via either
‘Option A’ or ‘Option B’. Calculate, for both options:

e. The revised gearing ratio

f. The ownership percentages of the two founding members
(8 marks)
xi. Calculate the ‘interest cover’:

e. As at 31st December 2020

f. When Option B is implemented (and under the assumption that profit before interest remains
the same)
(7 marks)

xii. Use your answers to a), b) and c) above to advise Philip and Theresa on the merits (or
drawbacks) of each option (‘A’ and ‘B’).
(4 marks)

Question 2

Use the information in figure 2 to calculate the maximum dividend per share it is possible for Hopperton to
declare at 31st December 2020. Advise the Directors as-to the wisdom of declaring the maximum possible
dividend.
(8 marks)

Question 3

The case states that the premises could be bought for £1.6m. The Statement of Financial Position shows
that cash of £600k is currently available to the firm. Explain why the Directors wish to raise £1.5m, instead
of simply raising £1m and using the cash for the remainder of the money required.
(5 marks)
Question 4

The opening paragraph of the case material states that Philip and Theresa decided to form a Private
Limited Liability Company. Suggest and explain three factors they would have considered in coming to
this decision.
(6 marks)

Question 5

Use the information in figures 1 and 2, plus the following additional information to calculate:

The rate of inventory turnover (stock turnover)

The creditor payment period
The debt collection period
The current ratio
The acid test ratio

Use the additional information for your calculations:

 all sales made during 2020 were on a credit basis.

 the total credit purchases made during 2020 amounted to is £1,360k

 the value of inventory held at 1st January 2020 was £490k

(8 marks)

Question 6

Use your answers to question five in order to make a comparison with the ratios provided for Samhain Ltd.
(see figure 3). Do not attempt to adjust figures for any differences in accounting policies. Which company
shows the better financial performance and / or position, and why?

(8 marks)

Question 7

vii. With regard to the fixtures and fittings bought by each company (Beltane and Samhain) on 1st
Jan 2018, calculate (to the nearest £k):

e. The net book value as at 31st December 2020

f. The depreciation charge for the year ended 31st December 2020.
(4 marks)

viii. With regard to the accounting policies (on depreciation) adopted by each firm:

g. Explain the phrase ‘accounting policy’.

h. Explain the relevance of the consistency concept when applied to accounting policies.
i. Which company has adopted the more ‘prudent’ policy?
(6 marks)

ix. Explain what criteria would be used by the Auditors of Beltane Ltd. when making a
judgement on that Company’s accounting policy on depreciation.
(3 marks)
Question 8

Explain the limitations of the current budgetary system in use at Beltane. Use the figures in figure 4 to help
illustrate your answer.

Your answer should make some reference as to whether the Taunton store should be closed if it returns a
loss for a second successive year.

(16 marks)

QUESTIONS CONINUE OVERLEAF

Question 9

g) Use the forecast of future earnings prepared by Tony Hands (figure 5) in order to arrive at a
valuation of one Beltane ordinary share. For the purposes of this calculation you should assume
that it is now 1st January 2021, and you should assume a cost of capital of 14%.

The following extract is from the net present value tables of £1 for a discount factor of 14%.

No. of Discount
years from Factor for
01.01.2021 14%
1 0.877
2 0.770
3 0.675
4 0.592
5 0.519

(10 marks)

h) Use the information in the Statement of Financial Position (figure 1) to arrive at another valuation
of one Beltane ordinary share.

(2 marks)

i) Outline the merits and drawbacks of each approach to share valuation that have been used in parts
a) and b) above.
(8 marks)

Total for the paper: 100 marks

END OF EXAMINATION PAPER