saica.co.za Part II Financial Management Qualifying Exam Question Paper : South African Institute of Chartered Accounts

Organisation : SAICA – South African Institute of Chartered Accounts
Exam : Part II – Financial Management Of The Qualifying Exam
Document Type : Sample Question Paper
Category or Subject : Financial Management

Website : https://www.saica.co.za/LearnersStudents/Examinations/ExamInformation/PastExamPapers/PartIIFinancialManagement/tabid/1232/language/en-ZA/Default.aspx
Question 1: https://www.southafricain.com/uploads/7085-Question1.pdf
Question 2 : https://www.southafricain.com/uploads/7085-Question2.pdf

Financial Management Qualifying Exam Question Paper :

Max.Marks : 100 marks
Question 1 :
Minkam College (Pty) Ltd (‘Minkam’) owns and operates three private schools in the Gauteng province. The first school was opened in 2002 and two further schools were opened during 2007 and 2010 respectively.

Related : SAICA Part I – Qualifying Exam Sample Question Paper : www.southafricain.com/1705.html

Minkam’s vision is to provide world-class education to its learners at an affordable price. Each school caters for learners from grade 0 to grade 12. Minkam is registered with the Independent Examinations Board (IEB) and its grade 12 pupils write the IEB examinations. Minkam has achieved a 100% pass rate in the IEB examinations over the past ten years and most of its learners qualify for admission to tertiary education

Minkam also offers a range of sporting and cultural activities to learners to ensure they receive a balanced education. The following are the core values of Minkam schools:
** Respect for self and others;
** Critical thinking;
** Accountability;
** Spirituality; and
** Community service.

Growth strategies :
Given the demand for private schooling in South Africa, Minkam intends to expand its presence in Gauteng and enter other provinces. The company could either open new schools or acquire existing private schools. Acquiring existing schools is the preferred option, as the company would acquire going concerns with track records.

Opening new schools involves considerable time and effort. For new schools to be potentially viable, the following conditions need to be present:
** The population density within a radius of 20 km around the new school needs to be high enough to enable Minkam to attract sufficient learners to the school;
** The families of potential learners need to earn sufficient income to afford Minkam’s fees;

** There should be limited competition from other schools in the area (demand for private education needs to exceed existing supply from other private schools and from government schools providing quality education); and

** Land to be acquired has to be relatively flat and large enough to make it possible to erect school buildings and sports fields in order to cater for at least 1 000 learners. Minkam estimates that vacant land of at least 7 ha is required for a new school.

Questions :
(a) Calculate the key ratios that the board of directors of Minkam should use in analysing the financial performance for FY2014 and financial position at the end of FY2014, of Minkam.

(b) Identify and describe the key business risks faced by Minkam. Communication skills – clarity of expression

(c) Identify and explain the merits and pitfalls of either acquiring existing schools or building new schools. Communication skills – logical argument

(d) Prepare a brief report to the board of directors of Minkam in which you critically assess the potential acquisition of Arrow College. Communication skills – presentation; clarity of expression

(e) Estimate the valuation range that Infinity is likely to place on 100% of the ordinary shares in issue of Minkam for the purposes of its investment in the company.

(f) Outline the advantages and disadvantages of Minkam listing on the JSE. Communication skills – clarity of expression

(g) Advise the board of directors of Minkam on how it should respond to the concerns raised by the outraged parents.