BES Group: Financial Statements Analysis

The May 2017 Management Case Study pre-seen was published very recently by CIMA. The pre-seen gives us ample financial information to work through and we’ve been digging into the numbers at VIVA Financial Tuition.

CIMA May 2017 MCS

The following article explains some of the main points relating to the financial statements for both the BES Group and its main rival in country E, VES.

BES: Profit and Loss Analysis

Starting with the BES Group’s Consolidated Statement of Profit or Loss and we see healthy revenue growth for the year with an increase of 11.4% compared to the 2015 figure. The fact that BES’s cost of sales figure has increased at a slightly lower rate of 11.1% in 2016 means that the company’s gross profit has improved by an even higher rate of 11.9% between 2015 and 2016.

Cost discipline is vital to this company if it is to maintain healthy profit margins.

This is because it is tied to its single price point (SPP) of just E$1 and has no room to increase prices if costs rise. Clearly BES has been good at keeping costs low because as we move down the profit or loss statement we see increasing rates of growth for the operating profit figures (14.3% increase) and net profit figures (17.9% improvement in 2016). The only slight concern is the increase of 15.1% in administrative expenses and the increasing finance costs.

Overall though, BES’s profit margins have all improved in 2016. The net profit margin (net profit/revenues) was 8.9% in 2015 while it stands at 9.5% in 2016.

Furthermore, James Kotter, the BES Group’s Chairman, mentions in the pre-seen that 2016 saw record levels of revenues and profits. So, all in all, 2016 has witnessed a strong financial performance for the company. 

BES: Balance Sheet Review

Turning to the BES Group’s Consolidated Statement of Financial Position and there are a few problems to contend with.

The two main issues relate to indebtedness and liquidity which we will see are even bigger problems for BES’s rival, VES. Because there is no detail given as to what non-current liabilities is comprised of, it’s difficult to say exactly what the firm’s level of gearing is. For the sake of simplicity, I’m going to assume that all of the non-current liabilities section is made up of long-term debt.

If we make that assumption, we see that BES has gearing (long-term debt/equity) of 66% which is very high. Furthermore, current liabilities exceed current assets with BES having a current ratio (current assets/current liabilities) of 0.6 and a quick ratio ([current assets – inventory]/current liabilities) of 0.4.

Ideally, you would want to see those above 1.0. This means that BES does not have enough liquid assets to cover its short-term obligations such as trade payables, short-term loans etc.

Competitor Analysis: VES

Now we consider BES’s main rival in the single price point (SPP) category of the value retail sector, VES. VES has revenues about one-third the size of BES’s. This is due to their lower sales prices and smaller store sizes along with the fact that they have fewer stores.

They demonstrate an even better ability to control cost of sales than BES with an increase of just 7.4% compared to revenue growth of 8.5%.

The good news stops there however!

As we move down through the Statement of Profit or Loss we see real problems with distribution costs rising 26% and administrative expenses rising by a massive 42% in 2016. This completely undoes the good work done in securing higher gross profits and by the time we get to the net profit figure we see that it has decreased 54% in 2016 to just E$1.8 million.

VES’s operating (operating profit/revenue) and net profit margins (net profit/revenue) are much lower than their rivals, standing at just 3.4% and 1.2% in 2016 respectively.

VES’s Statement of Financial Position demonstrates the same problems as BES’s, only worse. The company’s cash is just E$200,000 and the quick ratio ([current assets – inventory]/current liabilities) is just 0.2.

Furthermore, if we again make the assumption that non-current liabilities is comprised entirely of long-term debt obligations, then VES’s gearing (long-term debt/equity) stands at a massive 101%.

VES now faces a situation where its operating profit barely covers its interest payments – its interest coverage (operating profit/interest expense) has fallen from 3.1 in 2015 to just 1.8 in 2016.

The one ray of light I witness on VES’s balance sheet is the fact that their assets seem to work harder than BES’s in generating revenues. VES’s total assets are just one-fifth the size of BES’s yet, as we said before, they generate revenues that are one-third the size of BES’s. VES’s asset turnover ratio (revenues/capital employed) is 2.1 in 2016 compared to BES’s figure of just 1.0.

This article is a snippet of what’s available as part of the complete Smarter Study Pack. The pack includes almost four hours of pre-seen and industry analysis, mock exams weighted in accordance with official exams, financial ratio analysis and much more (https://vivatuition.com/store/).

Don’t forget to check out VIVA financial other great free MCS May 2017 articles here and here for more great insights ahead of your exam

Visit their YouTube channel for free, exclusive video content

CIMA MCS May 2017: BES

CIMA released the pre-seen materials for the upcoming MCS exam in May 2017 this week and this gives students the chances to prepare themselves to pass the exam first time.

The MCS exam combines the theory you have learnt from the E2, P2 and F2 objective tests and pulls it together in the form of a practical case study.

The MCS exam is challenging given the depth of the knowledge and skills required to pass but they are much more interesting from a students point of view.

Remember! Your role in this exam is that of Financial Manager – undertstanding your role within the company is important – you can read more it on a blog post I wrote here.

You can find the official pre-seen materials from CIMA here.

Likewise, I posted an article earlier this month with some general advice on the case study exams for all levels for the May 2017 sitting here.

I’d also recommend looking at the CIMA connect site for the MCS exam to find other students discussion and practical advice from CIMA.

BES: Pre-seen video analysis

You can find the full set of videos on the May 2017 MCS here.

BES: Strategic Analysis

You can find the full set of videos on the May 2017 MCS here.

BES: Top 10 Issues

You can find the full set of videos on the May 2017 MCS here.

MCS: Astranti Full Course

If you found the pre-seen videos helpful then the MCS course from Astranti is worth looking into as they provide a clear study plan with LOTS of materials, mock exams and support to help you pass the MCS.

CIMA MCS February 2017: Menteen

MCS Feb 2017 Exam Tips

CIMA have released the pre-seen materials for the upcoming MCS exam in February next year, this gives students the chances to prepare themselves to pass the exam firs time.

The MCS exam combines the theory you have learnt from the E2, P2 and F2 objective tests and pulls it together in the form of a practical case study to give you an example of what to expect in the role of Financial Manager. The MCS exam is challenging given the depth of the knowledge and skills required to pass but they are much more interesting from a students point of view.

You can find the official pre-seen materials from CIMA here.

Likewise, I posted an article earlier this month with some general advice on the case study exams for all levels for the February 2017 sitting here.

I’d also recommend looking at the CIMA connect site for the MCS exam to find other students discussion and practical advice from CIMA.

Menteen: Who are they?

You have around 6 to 8 weeks to analyse and really get to grips with the pre-seen materials so you will be ready on exam day. But who are xxx? Here are some of the key facts taken from the pre-seen materials.

  • The company was founded in 1936 and is currently listed on the stock exchange.
  • Your role is financial manager of Menteen Studios.
  • They are the largest film maker in Europe.
  • The company has grown organically and acquired other film studios.
  • Operating profit fell to $306m in 2016 from $389m in 2015.
  • Investment in films $1429m. makes up half of their Balance Sheet

Menteen: Pre-seen video analysis

As always, the guys at Astranti released their set of pre-seen video analysis and you can watch a preview below. It’s always a good idea to analyse the materials by yourself first – as it gets you thinking independently – before watching the full videos.

With some must information to analyse it’s crucial you don’t miss out of the key information or perhaps focus too much on the irrelevant parts – the pre-seen video analysis will help you do that.

You can find the full set of videos on the Febraury 2017 MCS here.

Menteen: Strategic Analysis

Understanding the strengths, weaknesses and strategic direction of the company will give you more depth to your answers on exam day and will help you pull of the information together. Think back to the E2 exam and SWOT analysis

What are the companies strengths? What are their core competencies? These kind of questions are discussed and answered in the strategic analysis video.

You can find the full set of videos on the February 2017 MCS here.

Menteen: Top 10 Issues

This video is brilliant for giving you a clear focus on what topics could come up in the exam. Some of them you should have discovered by yourself i.e. Identifying the company needs to improve their marketing or distribution channels – but it’s a great way to understand what you could be facing on the exam day itself.

You can find the full set of videos on the February 2017 MCS here.

MCS: Astranti Full Course

If you found the pre-seen videos helpful then the MCS course from Astranti is worth looking into as they provide a clear study plan with LOTS of materials, mock exams and support to help you pass the MCS.

CIMA MCS November 2016: Portafone

Well, the MCS students got the pre-seen material for their November exam yesterday afternoon and the case study scenario revolves around a mobile phone company called Portafone. 

The company designs and manufactures mobile telephones and in your role as financial manager you will be required to work all functional areas of the business and the bulk of work revolves around management accounting.

Understanding your role in the MCS exam is crucial as it will determine how you approach each question and you will need to cater your answers accordingly.

You can find the official pre-seen material for the November 2016 MCS Portafone from CIMA here.

Portafone: Pre-Seen Video Analysis

The first port of call (no pun intended) is to analyse the pre-seen material for the CIMA MCS exam. I would suggest going through the material on your own first and make notes on the key points and highlighting the important information – then watch the pre-seen video analysis from Astranti (below) and align your notes against the comments made by the tutors.

You can find the full set of videos on the November MCS here

Portafone: Strategic Analysis

The strategic analysis of the company should be done next so you can identify the strengths and weaknesses of the company and understand their strategic objectives.

Using the pre-seen analysis and strategic analysis together you will now probably have a good idea of what types of questions could come up. If there is a significant weakness in the company i.e. they are not committing enough investment and time in marketing, then there will probably be a question on the marketing mix (and remember you will need to think about this from a Financial Manager point of view).

To Strategic Analysis video will give you a much better understanding of Portfones strengths, weaknesses and overall strategy of the company.

You can find the full set of videos on the November MCS here

Portafone: Top 10 Issues

The Top 10 Issues video will highlight the most likely questions and topics that could come up on exam day. This is based on the tutors analysis of the pre-seen material alongside the strategic analysis of Portafone. 

It’s a great way to give your studies for the November MCS a clear focus on syllabus areas to brush up. Understanding and being prepared for the most likely questions to come up will give you a great chance of passing the CIMA MCS first time.

You can find the full set of videos on the November MCS here

Astranti MCS Pass Guarantee

Finally, the full MCS course for the Portafone case study covers every single base ranging from all pre-seen videos, mock exams with marking and online classes.

They believe by taking the course you will pass the CIMA MCS exam first time, so much so they offer a pass guarantee to all students.

You can find full details on the MCS course with pass guarantee here.

MCS Course Contents:

  • MCS study text (part 1 and 2)
  • Pre-seen analysis (video and text)
  • Strategic analysis (video and text)
  • Top 10 issues (video and text)
  • Industry analysis (video and text)
  • 2 x online master classes – each class is a full day revision (recorded and live)
  • 3 x online mock exams – answered with detailed tutor feedback
  • Ethics pack
  • Personal advice and guidance

CIMA Case Study Advice: November 2016

The seemingly never-ending cycle of CIMA Case Study exams is beginning to rear it’s head again with the pre-seen materials for the operational level case study being released next week.

So for students who are sitting case study exams in November, here is a run down of the best resources and what you should be doing if you want to pass the CIMA case study first time.

Post Exam Kits – August 2016

Learning from previous exam sittings is a great way to boost your chances of passing the CIMA November case study sittings. CIMA have provided all students with the previous exam papers for the August case study exams with the suggested answers – for ALL FIVE variants as well as other

The home page for the post exam kits (links below) will direct you to the;

  • Pre-seen material
  • Case study exam paper
  • Suggested answers
  • Examiners report
  • Exam marking guidance

TIP: As of writing, the examiners report and exam marking guidance for the August sitting are not yet available but if you search for the May 2016 case study post exam kits you will find these documents for that sitting there.

The examiners report – a topic I have written about here – is another brilliant free document provided by CIMA that will give you tips and advice on how to pass CIMA case study exams first time.

OCS: August 2016 post-exam kit

MCS: August 2016 post-exam kit

SCS: August 2016 post-exam kit

Case Study Master Classes

For those students who are self studying for the case study exams, the master classes hosted by Astranti offer TWO full days of live classes with one of their CIMA tutors – and it’s a great way to supplement your existing study resources.

The first one is based around the keys to passing the case study exam, while the second master class is scheduled a week before the actual exam date and packs in a whole day revision on the case study scenario and the likely questions that could crop up.

The video below is an example of the master class that was held regarding the SparkSpace scenario with the August 2016 MCS exam.

The dates of the master classes for the November case study exams are listed below:

OCS Master Classes: 8 October 2016 and 5 November 2016

MCS Master Classes: 15 October 2016 and 12 November 2016

SCS Master Classes: 22 October 2016 and 19 November 2016

Case Study: Full Course Contents

If you’re looking for a more comprehensive set of case study materials then Astranti also offer a full course with a PASS Guarantee – I passed the OCS last year by using their case study materials and they are really developing a strong reputation with their resources.

  • Study Text 1 – focuses on what you need to pass the case study.
  • Study Text 2 – summaries the key areas from the whole syllabus.
  • Pre-Seen Analysis – tutors detailed analysis of the pre-seen material.
  • Strategic Analysis – uses models & key theories and how to apply them in the exam.
  • Top 10 Issues – identifies the top 10 issues that could come up on exam day.
  • Industry Analysis – gives you the current industry trends for your case study.
  • Masterclass 1 – live session with tutor on keys to pass the case study exam.
  • Masterclass 2 – live session with tutor on revision of case study scenario.
  • 3 Mock Exams – with detailed feedback based on the actual case study scenario.
  • Personal Advice and Guidance – via private forums and progress reviews.
  • Ethics Pack – often overlooked but this comprehensive guide covers Ethics and how to apply it to the CIMA case studies.

You can find full details of their courses for all levels below and dates when the pre-seen material is released for the November 2016 exams:

OCS Course – November 2016 – the pre-seen material for the OCS exam is released on the week commencing 19th September 2016.

MCS Course – November 2016 – the pre-seen material for the MCS exam is released on the week commencing 26th September 2016.

SCS Course – November 2016 – the pre-seen material for the SCS exam is released on the week commencing 3rd October 2016.

Acorn Financial Tutors

Another learning provider who offer CIMA case study materials are Acorn and readers of this website can claim an extra 10% discount off ALL CIMA materials.

Their latest list of CIMA case study materials can be found here.

capture

 

Currently (offer ends 30 September 2016), the hard copy of their full Integrated Case Study kit has been reduced to £240 from £360 – so you can order it for £216 by emailing your request to thecimastudent[at]gmail[dot]com

Study Support: Whats App Groups

Whats App groups for student discussion around the upcoming case study exams also seems to be an idea that is growing with every passing exam sitting.

I was part of one for the OCS last year and, if you don’t need getting lots of updates and messages on Whats App (you can always turn notifications off), I found it very interesting to hear other students points of views about the pre-seen material and how they were handling their revision. Not everything was helpful but from the point of view of a student who is self studying it’s very much worth joining.

The sign up for the Whats App groups can be found on the CIMA connect site – here is the link for the OCS November 2016 group. I couldn’t find anything for the MCS or SCS on the CIMA connect site but I am sure they will be created shortly – or you could even start one yourself.

Good Luck and Happy Studying!

CIMA MCS August 2016: SparkSpace

The CIMA case study scenario for the upcoming MCS exam in August is based around a company called SparkSpace. This marks the beginning of the study period for those students taking the exam, all of your preparation and planning to pass the CIMA MCS first time can start now!

You can find the official pre-seen material for the August 2016 MCS from CIMA here.

SparkSpace: Pre-Seen Video Analysis

Understanding the pre-seen material is crucial to achieving a pass mark on exam day. Astranti are the market leaders in case study materials with their series of video analysis a must watch for all students.

Below is a preview of the pre-seen analysis for SparkSpace.

You can find the full set of videos on the August MCS here.

SparkSpace: Strategic Analysis

The strategic analysis of the MCS scenario SparkSpace is up next, here you will begin to understand and think about the mission and strategic goals of the company. What are their strengths and weaknesses? Are their strategic goals in line with ethical issues?

You can find the full set of videos on the August MCS here.

Wise Choice Hotels: Top 10 Issues

The Top 10 Issues video gives you a focus on the types of questions and areas you could expect to see on exam day. The tutor goes into detail why they believe these types of questions and areas of the syllabus will come up on exam day – a useful tool and video that will help you pass the CIMA case study.

You can find the full set of videos on the August MCS here.

Astranti MCS Pass Guarantee

I passed the OCS last year using the Astranti videos (pre-seen analysis, Top 10 issues and Strategic analysis) and would thoroughly recommend them.

Here is what is included in the course.

  • MCS study text (part 1 and 2)
  • Pre-seen analysis (video and text)
  • Strategic analysis (video and text)
  • Top 10 issues (video and text)
  • Industry analysis (video and text)
  • 2 x online master classes – each class is a full day revision (recorded and live)
  • 3 x online mock exams – answered with detailed tutor feedback
  • Ethics pack
  • Personal advice and guidance

You can find full details on the MCS course with pass guarantee here.

Good Luck!

CIMA MCS May 2016: IC Optical

It’s here! CIMA released the pre-seen material for the May 2016 sitting of the managemebt level case study exam – you can view the official document here.

CIMA have also released the May MCS case study pre-exam kit too which is packed full of resources, links and helpful hints on how to approach and ultimately pass the exam – you can find it here.

It’s also worth noting that the “Ask a Tutor” session for the MCS is on April 28th with more details available here. Please see below for the important dates for the May sitting of all case study exams. Good Luck!

may

IC Optical: Pre-Seen Analysis

The video preview from Astranti on the pre-seen analysis on the May 2016 MCS is now live and can be viewed below. The tutor goes through the pre-seen material issued by CIMA and points out the key facts and gets you thinking about the company IC Optical.

Understanding the pre-seen material is key to passing the CIMA case study exams and these videos will give you a solid footing when approaching the exam.

 

You can find the full set of IC Optical case study videos here.

IC Optical: Strategic Analysis

Alongside the pre-seen analysis you should also consider the case study from a strategic point of view. What are IC Optical’s strategic objectives and what can they improve on as a business? What are their weaknesses? Answers to these kind of questions will give you more depth to your responses on exam day and will give the “bigger picture” perspective.

The preview video below is well worth a watch for MCS students.

 

You can find the full set of IC Optical case study videos here.

Astranti MCS Pass Guarantee

Astranti are so sure you will get a pass mark by taking their full case study course, that if you don’t pass they will give you the next full MCS course for free.

Here is what is included in the course.

  • MCS study text (part 1 and 2)
  • Pre-seen analysis (video and text)
  • Strategic analysis (video and text)
  • Top 10 issues (video and text)
  • Industry analysis (video and text)
  • 2 x online master classes – each class is a full day revision (recorded and live)
  • 3 x online mock exams – answered with detailed tutor feedback
  • Ethics pack
  • Personal advice and guidance

You can find full details on the MCS course from Astranti visit here

*I will update this post once more resources become available for the May 2016 MCS