First of all congratulations to all CIMA students that received their exam results yesterday and were successful. Your hard work paid off so very well done! We’ve heard from a number of you that were successful and those are always the best type of emails to receive from students!
If your results weren’t as expected though and you didn’t pass then better luck next time.
Various papers have performance management within the syllabus. A rather unusual method of managing performance was recently reported by the press.
Japan’s Keihin Express Railway Co., in an effort to promote a friendlier customer service, has implemented something called “smile scanners” at its stations to assess the smiles of their employees!
Employees have to look into a camera every day and have their smiles scored by a computer that analyses their facial features and gives feedback. The quality of the smile is reportedly rated on a scale ranging from 100 to zero.
Is it effective? Can the scanner distinguish between an artificial and a genuine smile? The jury is still out.
While we at ExP love technology, we’re not sure we would submit to such assessment, at least not before our morning coffee!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2010-01-22 02:16:342010-01-22 02:16:34CIMA results and performance with a smile...
One item that people should be aware of is that management accounting and financial management are similar to the extent that they are both concerned with resource usage. But there are differences.
I was lucky enough to have recently flown on the new Airbus A380 super jumbo and that got me thinking about some of the financial management issues that Airbus face. Designing and producing the A380 must have been a phenomenal exercise and a real testament to man’s engineering skills. It’s capable of carrying over 800 passengers and has a range of nearly 15,000 km. It’s a fantastic machine.
But what has this all got to do with the difference between management accounting and financial management? One difference is that management accounting tends to deal in short-term timescales whereas financial management is generally more concerned with the longer term. Whilst the longer term is generally considered to be more than one year be aware that certain industries and companies have a distinctly longer “long-term”.
From inception to delivery the A380 took nearly 10 years and the long term view taken by Airbus is certainly longer than some businesses in for example the IT or fashion industries. Some of the businesses in these industries have distinctly shorter “long-terms”.
Anyway, despite the millions spent on design and development of the A380 there was one disappointing thing about my flight and that was I fell asleep during the film and missed the ending…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2010-01-18 18:41:062010-01-18 18:41:06Remember the short term and long term
It’s a common theme in discussions with my friends that we all seem to be getting busier and busier at work. Spare time is at a premium.
One of my hobbies when I do have some spare time is trying to keep fit. Six years ago I signed up for the 2004 London triathlon and since then I have been hooked on the sport. Triathlon is an event where you swim, cycle and then run. I’m very much an amateur and look up in awe at the elite athletes that seem to literally sprint around the course. For me it’s the training, competing and comradeship that is the fun behind the event.
At last year’s London Triathlon I was hoping to beat my personal best but unfortunately picked up an injury to one of my knees in the run up to the event. I was in two minds whether to start the race and then try to struggle through and finish it. After all, I had spent money on entering and had trained hard for the event.
It took a friend of mine who happens to be an accountant to make me see sense. He mentioned that the money I had spent on entering and the time I had spent on training was simply a sunk cost. (Students will remember from our free ExPress notes that sunk costs are not relevant. They have already taken place and cannot be reversed.)
What I needed to do now was to focus on the situation as it stood at that time rather than review any costs that had been incurred already. A very sensible piece of advice by my friend and probably saved me from injuring my knee any further.
In the end though I went for the middle ground by completing the swim but not the bike or run. As my friend pointed out, I didn’t sink in the swim and ignored the sunk costs in the bike and run!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2010-01-08 20:12:332010-01-08 20:12:33A sunk cost but at least I didn’t sink….
My 9 year old niece is a lovely girl and has some great characteristics. One of my favourites is that she’s a determined little girl who knows exactly what she wants! Christmas is fast approaching and top of her Christmas present list this year is a “Go-Go Hamster”.
For those of you outside of the UK you may not have heard of these toys. They are small battery operated hamsters with a retail price of £10. They are the latest must have toys for Christmas. I was determined not to leave Christmas shopping until the last minute this year and went off in search of some Go Go Hamsters. A slight problem however in that the shops have sold out of them! The big chains such as Toys R Us have sold out and even exclusive Hamleys in London has sold out.
A quick look on certain websites such as E-bay however shows that it is in fact possible to buy Go Go Hamsters. Some are being sold for more than £50 which when comparing to their retail price is a hefty mark up.
Anyway, back to ACCA Paper F5 and CIMA P2 and what exactly does my Christmas shopping list have to do with these papers? Students should be aware that Price skimming is where prices are set at a high price to catch customers willing and able to pay the price. Are we seeing an unofficial price skimming approach by individuals selling Go Go Hamsters?? Some may argue that it is simply individuals taking advantage of supply and demand and selling at a profit. The important thing for paper F5 though is to be aware of the concept of price skimming as well as all the other pricing strategies that a company can adopt (if you’ve forgotten then have a quick look at pages 14 and 15 of our ExPress notes).
In conclusion, I won’t tell you whether I actually bought a Go Go Hamster or not in case a certain 9 year old niece is studying F5 at an early age….
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2009-12-02 17:33:142009-12-02 17:33:14Are Go-GO Hamsters skimming into my Christmas shopping?
Pricing is an important area of ACCA and CIMA. There are a variety of pricing methods discussed in the syllabus including customer based pricing and competition based pricing. Broadly speaking, the former is based on the amount that customers would be willing to pay for benefits whilst the latter involves setting prices based on the prices of competing products.
In the UK, the Toy Retailers Association has just released their list of the top 12 toys that they expect to be most in demand in the UK this coming Christmas.
The interesting thing about the list is that the average price of the toys is just over £26. This compares to an average price of £32 in the Christmas 2007 list. This represents a fall of nearly 20%.
Has this fall been driven by cost savings by the manufacturer on labour or material? Or maybe reductions in transport and storage costs?
My guess is that the toy manufacturers are aware of the recession and the impact on parents buying power (customer based pricing issue). They are also aware that the toy industry is an extremely competitive industry and at the moment their competitors will be offering cheaper products (competition based pricing).
Either way, I’m sure that there won’t be a lot of children debating this issue on Christmas day when they open their presents!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2009-11-04 12:06:182009-11-04 12:06:18Thinking of Christmas already?
The other day I was talking to a few local business owners and I asked them if they knew what their cost of capital was. I got a few blank stares.
When we discussed the issue further, people started to warm up to the idea that the cost of capital can be viewed in terms of opportunity costs:
1. One owner said his cost of capital was the interest rate on his bank loans. I suppose he was 100% debt financed and probably not planning to refinance any time soon! Good luck to him!
2. A second owner said he took out all his savings from the bank and put it into his business. Since the bank deposit rate was so low, he figured his opportunity cost was pretty low as well. He has a point, though he must realize that he has moved into a higher risk category by withdrawing his money from the bank and investing it in a start-up business.
3. Another business owner said he started his company by borrowing from his relatives. Since they haven’t asked for it back he assumes its cost is zero. But he does pay a price, I suppose: at family gatherings he gets dirty looks from his relatives and his wife gives him constant grief. He suspects that the relatives complain about him to his wife.
Since all three owners want to expand their businesses, they asked me if I could recommend new sources of finance. I thought of sending them to our P4 candidates (after the exam!).
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2009-09-26 19:25:522009-09-26 19:25:52Do you know your cost of capital?
So, how am I doing weight wise? More to the point, what has this got to do with the exams?
Ratio analysis is an important area of the syllabus and one overriding principle to remember when looking at ratio analysis is that a ratio is irrelevant when looked at in isolation. Ratios must be looked at against comparatives or benchmarks in order to interpret them and then to look at the underlying causes.
So, back to my weight of 85kg. How am I doing? Is my weight ok?
85kg by itself is irrelevant. We need to look at comparatives for somebody who is my gender and my height. For example, 85kg for an adult male with a height of 1.90m (6 foot, 3 inches) is a healthy weight. 85kg for an adult female with a height of 1.60m (5 foot, 3 inches) is an unhealthy weight with the person being classified as obese.
Using my example of 85kg, by comparing it with people who are the same height as me is in effect comparing it with “industry standards”.
What about my performance over time? Is my weight increasing, decreasing or remaining static when compared to last year and the year before. Comparing movements within this personal ratio analysis unfortunately reveals that my weight has increased.
Now onto the important issue behind ratio analysis and that is of looking at the underlying cause of the movement in the ratio. Unfortunately, it looks like the cake I have with my afternoon tea could be on the way out…
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Steve Crossmanhttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve Crossman2009-09-02 18:32:532009-09-02 18:32:53My 85kg and ratio analysis...
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