CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 64 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 64
Topic #: 1

Ratios calculated from thefinancial statements of ST Group for the years ended 31 August 20X7 and 20X6 are as follows:

Which of the followingwould have contributed to the movements in these ratios?

ADuring 20X7 ST Group acquired an associate which made arelatively smallprofit for the year.

BST Group extended its customer base which resulted in an increase inthe volume ofsales during 20X7.

CDuring 20X7 ST Groupincreased the useful life of its vehiclesto five years from four and adjusted the depreciation charge accordingly.

DThe fair value of an investment acquired in 20X7 and classified as fair value through profit or losshas increased in value by the year end.

Show Suggested Answer

Suggested Answer: B

by Reena at Jan 04, 2023, 11:25 AM

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Mitsue

1 months ago

Option E: ST Group secretly started mining Bitcoin on their office computers. Boom, instant profits!

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Ciara

14 days ago

B) ST Group extended its customer base which resulted in an increase in the volume of sales during 20X7.

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Kati

18 days ago

A) During 20X7 ST Group acquired an associate which made a relatively small profit for the year.

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Tawanna

1 months ago

Hmm, I'm torn between Options B and C. Expanding the customer base or reducing the depreciation expense - either one could do the trick!

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Vallie

1 months ago

I'm going with Option D. An increase in the fair value of an investment would boost the profits and make the ratios look better.

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Valentin

4 days ago

I agree, an increase in the fair value of an investment can definitely impact the ratios positively.

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Christoper

11 days ago

Option D seems like the most likely reason for the movements in the ratios.

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Brinda

2 months ago

I think Option B is the correct answer. Increasing the customer base and sales volume would definitely improve the ratios.

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Fabiola

15 days ago

It makes sense that expanding the customer base would contribute to the movements in the ratios.

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Pamella

18 days ago

I agree, increasing the customer base can have a positive impact on the ratios.

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Eric

1 months ago

Option B is a good choice. More sales usually means better ratios.

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Gabriele

2 months ago

But what about the fair value of the investment increasing? Wouldn't that also affect the ratios?

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Flo

2 months ago

Option C is the correct answer. Extending the useful life of vehicles would reduce the depreciation charge, leading to higher profits and better ratios.

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Mirta

2 months ago

That makes sense. It's important to consider how changes in depreciation methods can impact financial ratios.

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Fabiola

2 months ago

Option C is the correct answer. Extending the useful life of vehicles would reduce the depreciation charge, leading to higher profits and better ratios.

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Rossana

2 months ago

I agree with you, Charlette. More sales would definitely impact the ratios.

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Charlette

2 months ago

I think the increase in sales volume would have contributed to the movements in the ratios.

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