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Saturday 20 October 2012

CIMA T4 Insights | TOPCIMA Calculations




After weeks of what seems like relentless effort, my colleague Duncan Dicks and I have finally completed the long awaited CIMA T4 Calculations Pack. Perhaps now I see why everyone complains so much about the calculations in the exam having been through so many and having to try to get perfect answers to them all! Trawling through years of T4 past papers and using our experience and expertise as CIMA tutors and markers, we have now compiled an extensive collection of calculations based on the real calculation questions in the CIMA T4 case study but which do not require an extensive knowledge of a pre-seen report, making them perfect for exam practise.

Despite years of working on the TOPCIMA T4 paper, in the creation of the Calculations Pack, Duncan and I have gained a far deeper insight into the calculation section of the CIMA T4 TOPCIMA exam. Here, for you, are the lessons we learned and what they mean for you as a T4 candidate:

1.       There aren’t many ‘theory’ calculations in past TOPCIMA papers, that is to say many of the calculations require a clear head and common sense rather than technical knowledge of calculations from previous papers. There’s little point therefore spending a lot of time reviewing past technical knowledge – your time is much better spent looking at recent CIMA T4 exam questions.

2.       The main exception to this is primarily the NPV calculation which turns up frequently and needs to be able to be carried out very quickly.  In some cases there may be three options with an NPV required on each.  In this case there is usually only a single revenue and single cost line so don’t be put off, they’re usually straightforward, but you do have to work quickly to get everything done.

3.       Other calculations which require some theoretical knowledge have turned up including payback period (discounted and undiscounted), share valuation, return on investment. Make sure you've revised these topcis.

4.       Many calculations are simple calculations of annual profit, comparison with budget or cash flow forecasts.  These just require you to keep track of the figures carefully. Be diligent throughout.

5.       Probably about 75% of the time, the question is explicit about what is required.  Phrases such as ‘The Finance Director has asked you to calculate the operating profit for each option’ often turn up.  Sometimes the calculation required is strongly hinted at with phrases such as ‘the target Return on Investment is …’ or ‘The company uses a cost of capital of…’.

In both these cases it isn’t uncommon to find students who have calculated something completely different to that expected, and often something that isn’t helpful to the decision being made. Take care and do what the examiner wants, then remember to use that information when you are analysing the information in the body of your report.

6.       Occasionally it is simply up to you to decide what calculation, if any, would help the company to make a decision.  Think carefully about this.  It is frequently the case that students calculate say a unit profit when the total profit is the decision making factor.  Read the question carefully and think about what will best help your analysis.

These questions are unlike anything from previous papers so practise of TOPCIMA style questions is key. Do as many practise questions as you can, and ensure you do them under strict timed conditions, so that you are practising doing them quickly and so you leave plenty of time for the rest of the report. Calculations are very important, but not so important that you should spend any more than 20 to 25 minutes on them in the real exam. 

Get a sample of the calculations pack here





1 comment:

  1. CIMA Online Study

    You guys should also add CMA under the list of professional courses. It’s a low cost local alternative to students who cannot afford UK based CIMA.

    ReplyDelete