Page 14 - OCS Workbook - Day 1 Suggested Solutions (May 2018)

CIMA MAY 2018 – OPERATIONAL CASE STUDY

Question Response

Comment on Positives
Mansako’s cash flow. • Cash generated from operations > L$21m
• L$6m more cash at the end of 2017
• Able to pay tax of L$4.7m, a dividend of L$2.3m, invest and
additional L$8.7m in NCAs and still have a positive cash flow

Negatives
• An extra L$2.3m tied up in working capital

Discuss whether the Arguments for
2018 budget is realistic. • Increase in revenue could be justified by the same factors that
explained growth in 2017 – e.g. expect sales in Asia to continue to
rise
• Gross margin comparable 2017, 2016
• Increase in cost of sales could be slightly pessimistic rather than
too optimistic.
Against
• Increase in cost of sales could be too optimistic.

56 KAPLAN PUBLISHING