1

www.globalapc.com








ACCA P5 Advanced Performance Management

Sample Study Note

For exams in DEC2014










2
www.globalapc.com



















Lesco Group Limited, April 2015
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the prior written
permission of Lesco Group Limited.


3
www.globalapc.com
Sample Note Content:


Product Summary .............................................. Error! Bookmark not defined.
Live online course timetable: ............................... Error! Bookmark not defined.
Sample note: Corporate failure prediction ......................................................... 7








Please note:
This is just the sample study note extracted from the main study note in your tuition study
[This tuition study note is consistent in basic/super/gold package]. There would be more
chapters in the main study note covering the whole ACCA syllabus.
You can also take a look at the content within the main study note below:







4
www.globalapc.com
Product Summary














5
www.globalapc.com
Live online course timetable


Timetable: [Super+Gold package-additional revision would
be agreed between tutor and student]
Live Online Revision
Live revision1 Live revision2
F5 Performance management 25
th
Oct 7:00a.m.-14:00 22
nd
Nov 6:00a.m.-13:00
F7 Financial Reporting (INT) 2
nd
Nov 6:00a.m.-13:00 29
th
Nov 6:00a.m.-13:00
F8 Audit and Assurance (INT) 18
th
Oct 7:00a.m.-14:00 19
th
Oct 7:00a.m.-14:00
F9 Financial Management 4
th
Oct 7:00a.m.-14:00 5
th
Oct 7:00a.m.-14:00
P1 Governance, Risk and
Ethics
1
st
Nov 6:00a.m.-13:00 30
th
Nov 6:00a.m.-13:00
P2 Corporate Reporting (INT) 26
th
Oct 7:00a.m.-14:00 9
th
Nov 6:00a.m.-13:00
P3 Business Analysis 11
th
Oct 7:00a.m.-14:00 12
th
Oct 7:00a.m.-14:00
P4 Advanced Financial
Management
8
th
Nov 6:00a.m.-13:00 23
rd
Nov 6:00a.m.-13:00
P5 Advanced Performance
management
15
th
Nov 6:00a.m.-13:00 16
th
Nov 6:00a.m.-13:00
P7 Advanced Audit and
Assurance (INT)
27
th
Sept 7:00a.m.-14:00 28
th
Sept 7:00a.m.-14:00

6
www.globalapc.com
Last minute revision
Last minute revision Tutor
F5 Performance management 28
th
Nov 12:00-14:00 Ian
F7 Financial Reporting (INT) 1
st
Dec 12:00-14:00 Steve
F8 Audit and Assurance (INT) 22
nd
Nov 14:30-16:30 Alan
F9 Financial Management 22
nd
Oct 12:00-14:00 Steve
P1 Governance, Risk and Ethics 30
th
Nov 13:30-15:30 Alan
P2 Corporate Reporting (INT) 16
th
Nov 14:00-18:00(4hrs) Kieran
P3 Business Analysis 18
th
Oct 14:30-16:30 Alan
P4 Advanced Financial Management 19
th
Nov 12:00-14:00 Steve
P5 Advanced Performance management 21st Nov 12:00-14:00 Ian Janes
P7 Advanced Audit and Assurance (INT) 23
rd
Nov 13:30-15:30 Alan









*Please Note: This Timetable may be subjected to future changes.
Kindly check regularly for any possible updates.



7
www.globalapc.com
Sample note: Corporate failure prediction

Quantitative measure: Altman Z score

Z = 12X1 + 14X2 + 33X3 + 06X4 + X5

Where:
X1 is working capital/total assets (WC/TA);
X2 is retained earnings reserve/total assets (RE/TA);
X3 is Profit before interest and tax/total assets (PBIT/TA);
X4 is market value of equity/total long-term debt (Mve/total long-term debt);
X5 is Revenue/total assets (Revenue/TA).

Key to remember:
If the score is 3 or above they are financially sound
Between 1.81 and 2.99 they need further investigation [grey area]
Below 1.81 they are in danger of bankruptcy

What to do to prevent failure?
See the signs and take action.
Seek external advice.
Management accept there is a problem.
Make strategic changes as necessary.
Put in more controls and management systems.

8
www.globalapc.com
Qualitative measure: Argentis A score
Qualitative models such as Argenti use a variety of qualitative and some
nonaccounting factors such as management experience, dependence on one or a
few customers or suppliers, a history of qualified audit opinions and the business
environment including the industry and economic situation.
Argenti developed a model, which is intended to predict the likelihood of company
failure based on three connecting areas that indicate likely failure:
defects,
mistakes
symptoms of failure
Which are all awarded a specific score.
















9
www.globalapc.com
Sources of
problems
Variable Score
A Management defects
Chief Executive is an autocrat 8
Chief Executive also holds position of Chairman 4
Passive Board of Directors 2
Unbalanced Board of Directors, not representing all business functions or
overweight in one discipline
2

Weak Finance Director
2
Poor management in team 1

Accounting defects
No budgets or budgetary controls

3
No cash flow forecasts, or not up to date 3

No costing system: costs and contribution of each product or service are not known
3

Poor response to change: old-fashioned product or service, obsolete production
facilities, out-of-date marketing methods; old directors
15
43
B Management mistakes(as a result from the above defects)
High gearing 15
Overtrading 15
Failure of a big project 15
45
C Symptoms of trouble(as a result from the above defects and mistakes)
Financial indicators forecasting poor results[poor Z-score]

4
Creative Accounting

4
Non-financial signs (eg high staff turnover). 4
12


10
www.globalapc.com
Score Maximum permitted
A 10
B 15
C 0
25

If any score which are more than 25 then it will need immediate action to avoid
company insolvency.

















11
www.globalapc.com
Strengths and weaknesses of quantitative and qualitative models for
predicting corporate failure

Quantitative models:
Advantages:
Quantitative models such as the Altman Z-score use publicly available
financial information about a firm in order to predict whether it is likely to fail
within the two-year period.
The advantages of such methods are that they are simple to calculate and
provide an objective measure of failure.

Disadvantages:
However, they only give guidance below the danger level of 18 and there is
potential for a large grey area[1.81-2.99] in which no clear prediction can be
made.
Additionally, the prediction of failure of those companies below 18 is only a
probabilistic one, not a guarantee. This means not every company with Z
score under 1.8 will go bankruptcy.
These models are open to manipulation through creative accounting which
can be a feature of companies in trouble.
Qualitative models:

Advantages:
The advantage of the method is the ability to use non-financial as well as
financial measures and the judgment of the investigator

Disadvantages:
But this is subjective and will vary from different investigators.