Advanced investment evaluation
Part B is a very important part of the whole AFM course, and the proportion of required knowledge and examination scope almost exceeds 40%. This part is also a small detail that many students easily miss.
For the basic investment evaluation method NPV, the focus of investigation is basically the same as that in FM stage, and the following points need to be paid attention to:
1. What is used for NPV calculation must be the cash flow part related to the project, which is the future incremental part. Therefore, it is necessary to distinguish whether each figure in the subject conditions is related cash flow, and non-cash flow items such as investigation/research cost and commitment cost constraint cost in the early stage of project development should not be included in NPV calculation;
2. For the calculation of working capital, it should be noted that the word "immediate investment required" in the title refers to the immediate investment in 0 years, not 1 year, that is, the same year as the initial investment, but not combined. In addition, it should be noted that the liquidity is generally recovered in the year when the project ends, and the incremental part of the liquidity must be calculated separately;
3. Another very important task is the calculation of tax revenue, and we should pay attention to the following three points:
When do I pay taxes? Is the tax paid in the current period or deferred for one year? Pay attention to problems such as default/deferred payment;
(2) What is the tax base? Generally, it is taxable profit, which is the cash flow in NPV calculation, so the cash flow of taxable part is used;
(3) Is there a tax-free part? Generally speaking, the depreciation of fixed assets is assumed to be a tax deductible part, so the TAD can be calculated and reflected by working alone, and it is not easy to make mistakes. Are there any tax exemption policies mentioned in the title conditions? For example, there is no tax in the first two years or taxable losses can be deducted.
On the basis of the above three error-prone points of FM, we need to pay extra attention to the contents that need to be considered when calculating foreign NPV in overseas investment evaluation:
1. Use PPPT formula to calculate the exchange rate. The numerator is the foreign inflation rate and the denominator is the domestic inflation rate. Don't confuse it, but list it in the first step of work 1
2. The general assumption of the title is the existence of bilateral tax treaties. If there is no such assumption, please fill in the answer yourself. In addition, if you pay at a higher tax rate, you have to make up more, so if you pay less overseas, you have to make up the tax difference after returning home. Note that when you make up the tax difference, the tax base is PBT overseas;
3. Memorize six categories of internal cash flow of inter-company liquidity group. For overseas subsidiaries, expenses are tax deductible, while for the parent company, they are income. After the restoration, they need to pay the full tax according to the domestic tax rate;
4. Pay attention to whether there is any limit to the repatriation of profits, whether it is time or amount.
(1) For the evaluation of risks and uncertainties in investment evaluation, it should be noted that the calculation of value at risk (VaR) should be multiplied by time (), and the time should be in years. In addition, it should be able to clearly explain the problems reflected by the calculation results, as well as the potential problems and application scope of this method; Pay attention to the method of deleting EVA from the syllabus and taking the exam again, but don't worry that the topic will tell you the calculation formula. Just find the corresponding number and set the formula.
(2) In the application of option pricing theory in investment decision-making, besides repeatedly identifying several variables, it should be noted that the variable T is the time from now to the expiration date of the option, not the time of the right itself; In addition, please press E directly on the calculator for the constant E, and do not bring in 2.7 1828, so as to avoid regrettable calculation errors due to rounding.
(3) In the risk-adjusted weighted average cost of capital (WACC) and adjusted present value (APV), we should pay attention to the asset beta formula used in both deleveraging and leverage in the calculation of risk-adjusted WACC, but the values brought by Vd and Ve are different with different unknowns; The discount rate of APV in calculating NPV in the first step is Kei/Keu (equity cost of full equity financing), and the annuity coefficient used in calculating the financing impact in the second step is Kd of the parent company or Rf of the overseas host country. In addition, it depends on whether the current interest is paid. If deferred payment is involved, some tax relief losses will be deducted.
Part c acquisition and merger
This part is often inspected together with Part D, often appearing in the 25 sub-questions of Q2 and Q3 in the exam, and occasionally assessed in Q 1 in recent exam seasons. The whole idea is simpler than other parts. Please pay attention to the following mistakes during the exam:
(1) The general idea of the premium part of the purchase price is to subtract the value of the merged new company from that of the original two companies. It is necessary to master the form of consideration and the calculation of percentage return of shareholders' shares. You can refer to exercise 20 13 Jun Hav Q2 (c) to master this knowledge point.
(2) For enterprise valuation in M&A, AFM focuses on mastering the free cash flow method in three categories, which is not only the most frequently tested, but also the most widely used and scientific valuation method in practice.
There are two methods to estimate the value of equity here, and which method to use depends on the conditions provided by the title: one is to calculate the free cash flow of the company (FCFF), add WACC discount to get the overall value of the company, and subtract the value of debt to get the value of equity; The other is to calculate free cash flow to equity (FCFE), and directly calculate the value of equity by discounting and adding up the cost of equity.
1. For the calculation of FCFF, it is necessary to pay attention to the deduction of interest expenses before taxation. If you want to consider interest later, you should deduct the net interest paid, that is, interest x (1-t).
2. When using the calculated cash flow for valuation, we should pay attention to whether the subject condition is a form of sustainable growth and whether the subject mentions a certain growth rate. If so, we should use DVM as a model to discount the value obtained.
Part d company reorganization
And reorganization
The content of part D is often combined with the content of part B. The three-year examination trend has increasingly highlighted the importance of this part, which is also the most flexible part in the examination, and largely reflects the basic skills that students have learned before, including simple financial reports and accounting and other related basic knowledge. Financial restructuring basically involves two categories:
(1) A calculation problem is that after the reorganization of enterprises, students need to redraft two reports, SOFP and SPL, and discuss the influence of various stakeholders. Note that the starting point to solve the problem can start with simple accounting changes, such as whether there are changes in fixed assets or cash. The change of general equity needs to squeeze out a certain number through accounting identity after the completion of the construction of various subjects in the report, and discussing the influence of various stakeholders will inevitably involve the comparison before and after the reorganization, including the rate of return.
(2) another kind of calculation problem may also involve the analysis of the overall performance of the enterprise itself. Among the three analysis methods, the ratio analysis is the most frequently tested, which is also the method that runs through the whole ACCA course. Note that for AFM financial management course, in addition to the three common dimensions of profitability/liquidity/debt ratio from statements, it also emphasizes the performance of the enterprise itself in the market, shareholder ratio, the most intuitive stock price and the most commonly used price-earnings ratio. The proportional formulas involved in the four dimensions need to be mastered by students themselves, and the formula table of the test paper will not be provided.
The reconstruction of enterprise organization is generally seen in the comparison of various methods. The solution starts with the definition, characteristics, advantages and disadvantages of the methods, so I won't go into details here.
Department e treasury and
Advanced risk management technology
The last part is very common in Q3 in every previous exam, but the frequency of Q 1 has increased in recent two years. Generally in Q3, the simple scope of the exam is to choose between interest rate risk and exchange rate risk. If we examine in Q 1, interest rate and exchange rate risks are often combined at the same time. The learning process of this part of the content is difficult to understand, but it is easy to solve problems from the perspective of examination, and the process is more modular and inseparable. After some systematic understanding and study, we need to emphasize the following mistakes:
(1) The hedged exchange rate risk is a time point value, and the interest rate risk is a time period value, usually an annualized interest rate. Remember to multiply it by the time ratio;
(2) Pay attention to whether the currency unit of the futures option contract is foreign currency or local currency when hedging exchange rate risk, and ensure that the currency unit of the hedging direction judged is consistent with the currency unit of the contract;
(3) The maturity date of March/June/September/1February or 4 months /5 months with self-made themes of futures or options contracts refers to the end of the current month, that is, the last day of the current month, and a complete month should be considered when calculating the benchmark;
(4) Pay attention to the premium option fee in options, which is usually divided into US dollars, and pay attention to the conversion of units when calculating; In addition, the option fee is paid at 0 o'clock, so it must be converted at the spot exchange rate;
(5) Pay attention to the choice of the exercise price of the banks in the territory. For call options, the exercise price is higher, while for put options, the exercise price is lower. The right to sell the option is in the other party's hand, so exercise the option when it is unfavorable to you (that is, when the other party makes a profit).
The above contents are the error-prone points summarized by Shiela according to her own teaching and answering questions after class. In addition, it is suitable for sorting out the self-study exam before the exam, and here is an extra exam-oriented chicken soup and welfare:
After all the preparations, students' mentality and test-taking habits will be tested, so when you sit in the examination room, you should be confident. No matter how difficult the topic is, try your best to answer the questions you haven't seen before and don't collapse. You have to trust others not to. The P-stage exam itself is a comprehensive ability based on a solid foundation, so it is normal to feel very entangled during the exam and feel very relieved after the exam.
In addition, after mastering all the knowledge points in an all-round way, another thing that teachers fight for in the examination room is "time management", and how many people are abruptly defeated by the phrase "too late" and "not enough time". Of course, this requires students to practice and simulate exams repeatedly in the preparation process, so as to develop good test-taking habits and mentality. Everyone has a total of 195 minutes to complete the test paper with a score of 100, so I suggest you arrange the time for answering the three questions strictly according to the score. Time is up, whether this question is finished or not, please go to the next question.
Once again, I suggest you answer three questions in strict accordance with the following time:
Q 1 (50 points): 15:00—— 16:45
Q2 (25 points): 16:45—— 17:30
Q3 (25 points):17: 30 ——18:15
Finally, Deep Space Network believes that everyone can successfully pass an AFM exam!