Page 12 - CIMA OCS Workbook February 2019 - Day 1 Suggested Solutions
P. 12
CIMA FEBRUARY 2019 – OPERATIONAL CASE STUDY
CHAPTER SIX – F1
EXERCISE 1 – FINANCIAL STATEMENTS
Ratio 2019 (budget) 2018 2017
Growth in revenue 5.8% (4.2%)
Growth in cost of sales 3.8% (W1) (3.7%)
Growth in gross profit 16.6% (W1) (7.0%)
Gross profit margin 16.5% (W1) 15.0% 15.4%
Growth in selling and distribution costs 7.8%
Growth in admin expenses 1.7%
Growth in operating profit 15.5% (15.2%)
Operating profit margin 8.5% 7.8% 8.8%
Inventory days 95 days 89 days
Receivables days 24 days 18 days
Payables days 37 days 36 days
Length of operating cycle 82 days 71 days
Note: Seasonality means y/e balances (and hence operating cycle calculations) may not be typical:
• Y/e inventory likely to be high due to building up stock levels to meet summer demand
• Y/e receivables likely to be low as most sales made in the summer will have been paid for and
there are lower sales in the winter
W1: Budget for 2019 can be redrafted as follows:
F$000
Revenue 20,940
Cost of sales (14,260 + 3,217) (17,477)
Gross profit 3,463
Other operating costs (383 + 1,299) (1,682)
Operating profit 1,781
54 KAPLAN PUBLISHING
