CASE STUDY WALKTHROUGH
1. How to use the Advanced Information
2. Understanding the Mark Scheme
3. Dealing with Requirement 1
4. Dealing with Requirement 2
5. Dealing with Requirement 3
6. Executive Summary
7. Exam Technique
,HOW TO USE THE AI
The required preparation can be broadly listed under six main headings:
• Familiarisation with all the information provided
• Financial statement analysis (understanding the financial story)
• Financial data analysis (understanding the detailed financial context)
• Commercial analysis (financial, operational and strategic analysis)
• Commercial analysis (developing awareness of ethical and business trust considerations)
• Integrating and assembling your preparatory work
Examples of questions that could be asked or matters that could be considered under each of
the above headings are as follows:
• Familiarisation with all the information provided
➢ What is your role?
➢ What sort of organisation is the business?
➢ What commercial, organisational or ethical issues may be discerned?
➢ What information might you need which has not been provided?
• Financial statement analysis (understand story behind revenue, profit & cash)
➢ Is the business making good profits, marginal profits or losses?
➢ How does it make its profits? Why is it making losses?
➢ Is its statement of financial position (balance sheet) strong or weak?
➢ Is it appropriately financed?
➢ Is it generating or absorbing cash?
• Financial data analysis
➢ What additional financial information is provided apart from the financial statements?
➢ What other relevant non-financial documents are provided: legal agreements; tender
➢ documents?
➢ What other numerical details are being provided for consideration: forecasts; tender
➢ prices?
➢ What key assumptions for the additional financial or non-financial factors are provided?
➢ What are the identifiable critical factors concerning the data provided: dates; tipping
points?
• Commercial analysis (financial, operational and strategic analysis)
➢ How financially significant is the proposal/opportunity under consideration?
➢ Where is the business in its lifecycle? (this is the framework for your requirement 2)
➢ What generic issues face businesses at this point?
➢ What are the specific (potential) strategic issues facing this business at this point?
➢ What are the current industry issues?
• Commercial analysis (developing awareness of ethical and business trust considerations)
➢ What are the ethical issues surrounding this industry/similar companies?
➢ What is the ethical stance of the business?
• Integrating and assembling your preparatory work
➢ What opportunities are there to brainstorm with colleagues?
➢ What opportunities are there to talk with managers and partners or other senior
colleagues?
➢ What structured discussions can you have concerning any case issues with a learning
group?
➢ How can you create a clear structure and cross-referencing system?
➢ How will you use your information?
Look at strategies (for R.2/3); scope for prof. scepticism e.g. source of info; sales mixes (R1); review
on basis of what drives rev/ GP/ OP
,UNDERSTANDING THE MARKING SCHEME
Criteria
To ensure a pass, a candidate should aim to:
✓ Achieve more than 50% passing grades (SC or CC) in each of the elements (three
requirements plus the Executive Summary)
✓ Achieve more than 50% overall
✓ Have few NAs overall (≤4 is a guideline)
Other points:
Conclusions within the 3 requirements must be under separate headings.
Headings should be meaningful, i.e. not just ‘Requirement 1’ or ‘Appendix 2’
AUI: Familiar with info provided → assimilate → provide good analysis
SPS: Analyse problems → Structure solutions → Exercise proper judgement
AJ: Apply judgement → support your conclusions
E.G. on feasibility of new product
▪ AUI – presenting calcs clearly with workings & stating assumptions
▪ SPS – analysing calculation of revenue by product
▪ AJ – comment on assumptions
▪ CR – concluding on viability of product
Ethics & Business Trust Issues can feature in all requirements. Approach:
1. Gather the relevant facts and/or identify the problem; eg inducements offered by a potential
supplier to win a contract.
2. Identify the affected parties; eg the client, the supplier and any intermediaries.
3. Identify the ethical issues involved; eg bribery, reputational harm.
4. Consider the courses of action and their associated consequences; eg amounts involved are
not material so ignore, or risk of a financial crime being committed. Whistle-blow/ report to
mgrs/ inform shareholders/ raise internally
5. Decide upon a course of action; eg refuse the bribe and seek an alternative supplier.
, REQUIREMENT 1 – FINANCIAL STATEMENT ANALYSIS
Requirement 1 will ask you to perform 'financial statement analysis' on the latest set of management
accounts: comparing them to the previous set provided in the AI and commenting on their
meaning/relevance to the company today.
▪ Facts/figure – WHAT, this is AUI
▪ Reasoning – WHY, this is SPS
▪ Evaluation – SO WHAT, this is AJ
▪ Summary, and way forward – this is CR
Pages 30-31 of Study Manual for examples of SOFP & Cashflow analysis
AUI
AUI 1: Well presented with appropriate headings and columns for comparative figures & movements
AUI2: Clearly showing the £ and % movements on the face of the P&L (AUI is all about P+L
Headings) in the appendix
AUI3: Wider context - make references to other information in AI e.g. budgets, forecasts etc.
SPS
Ensure this in main body of report
Drills down 1 level from face of P+L in AUI analysing why the movements in AUI occurred
SPS 1: Revenue movement BECAUSE – consider revenue mix/ volume & price
SPS 2: Gross/ Operating margin movement BECAUSE – consider major cost movements
SPS 3: Other F.S. analysis (interest cover, inventory adj’s, impairments etc) and ethics
AJ
Why the movements in SPS occurred
Explaining why individual revenues streams went up/down
Compare overall performance to company targets/market; if cost of sales behaved differently from
revenue; impact of any accounting adjustments; impact on one-off costs of one-off events
NB: there is significant overlap between SPS & AJ in different mark schemes.
Therefore, overall E.G. revenue down by 6% representing £660k to £30m (AUI). This is because
growth in XYZ sector fell by 25% (SPS). This is caused by wider market contraction and reduced
advertising budget (AJ).
CR
Marks awarded for summarising your analysis and advising on way forward
Summarising: what happened to revenue/ GP/ OP & any adjustments – give figures
Recommendations: how to grow sales/ reduce costs and deal with other issues
1. How to use the Advanced Information
2. Understanding the Mark Scheme
3. Dealing with Requirement 1
4. Dealing with Requirement 2
5. Dealing with Requirement 3
6. Executive Summary
7. Exam Technique
,HOW TO USE THE AI
The required preparation can be broadly listed under six main headings:
• Familiarisation with all the information provided
• Financial statement analysis (understanding the financial story)
• Financial data analysis (understanding the detailed financial context)
• Commercial analysis (financial, operational and strategic analysis)
• Commercial analysis (developing awareness of ethical and business trust considerations)
• Integrating and assembling your preparatory work
Examples of questions that could be asked or matters that could be considered under each of
the above headings are as follows:
• Familiarisation with all the information provided
➢ What is your role?
➢ What sort of organisation is the business?
➢ What commercial, organisational or ethical issues may be discerned?
➢ What information might you need which has not been provided?
• Financial statement analysis (understand story behind revenue, profit & cash)
➢ Is the business making good profits, marginal profits or losses?
➢ How does it make its profits? Why is it making losses?
➢ Is its statement of financial position (balance sheet) strong or weak?
➢ Is it appropriately financed?
➢ Is it generating or absorbing cash?
• Financial data analysis
➢ What additional financial information is provided apart from the financial statements?
➢ What other relevant non-financial documents are provided: legal agreements; tender
➢ documents?
➢ What other numerical details are being provided for consideration: forecasts; tender
➢ prices?
➢ What key assumptions for the additional financial or non-financial factors are provided?
➢ What are the identifiable critical factors concerning the data provided: dates; tipping
points?
• Commercial analysis (financial, operational and strategic analysis)
➢ How financially significant is the proposal/opportunity under consideration?
➢ Where is the business in its lifecycle? (this is the framework for your requirement 2)
➢ What generic issues face businesses at this point?
➢ What are the specific (potential) strategic issues facing this business at this point?
➢ What are the current industry issues?
• Commercial analysis (developing awareness of ethical and business trust considerations)
➢ What are the ethical issues surrounding this industry/similar companies?
➢ What is the ethical stance of the business?
• Integrating and assembling your preparatory work
➢ What opportunities are there to brainstorm with colleagues?
➢ What opportunities are there to talk with managers and partners or other senior
colleagues?
➢ What structured discussions can you have concerning any case issues with a learning
group?
➢ How can you create a clear structure and cross-referencing system?
➢ How will you use your information?
Look at strategies (for R.2/3); scope for prof. scepticism e.g. source of info; sales mixes (R1); review
on basis of what drives rev/ GP/ OP
,UNDERSTANDING THE MARKING SCHEME
Criteria
To ensure a pass, a candidate should aim to:
✓ Achieve more than 50% passing grades (SC or CC) in each of the elements (three
requirements plus the Executive Summary)
✓ Achieve more than 50% overall
✓ Have few NAs overall (≤4 is a guideline)
Other points:
Conclusions within the 3 requirements must be under separate headings.
Headings should be meaningful, i.e. not just ‘Requirement 1’ or ‘Appendix 2’
AUI: Familiar with info provided → assimilate → provide good analysis
SPS: Analyse problems → Structure solutions → Exercise proper judgement
AJ: Apply judgement → support your conclusions
E.G. on feasibility of new product
▪ AUI – presenting calcs clearly with workings & stating assumptions
▪ SPS – analysing calculation of revenue by product
▪ AJ – comment on assumptions
▪ CR – concluding on viability of product
Ethics & Business Trust Issues can feature in all requirements. Approach:
1. Gather the relevant facts and/or identify the problem; eg inducements offered by a potential
supplier to win a contract.
2. Identify the affected parties; eg the client, the supplier and any intermediaries.
3. Identify the ethical issues involved; eg bribery, reputational harm.
4. Consider the courses of action and their associated consequences; eg amounts involved are
not material so ignore, or risk of a financial crime being committed. Whistle-blow/ report to
mgrs/ inform shareholders/ raise internally
5. Decide upon a course of action; eg refuse the bribe and seek an alternative supplier.
, REQUIREMENT 1 – FINANCIAL STATEMENT ANALYSIS
Requirement 1 will ask you to perform 'financial statement analysis' on the latest set of management
accounts: comparing them to the previous set provided in the AI and commenting on their
meaning/relevance to the company today.
▪ Facts/figure – WHAT, this is AUI
▪ Reasoning – WHY, this is SPS
▪ Evaluation – SO WHAT, this is AJ
▪ Summary, and way forward – this is CR
Pages 30-31 of Study Manual for examples of SOFP & Cashflow analysis
AUI
AUI 1: Well presented with appropriate headings and columns for comparative figures & movements
AUI2: Clearly showing the £ and % movements on the face of the P&L (AUI is all about P+L
Headings) in the appendix
AUI3: Wider context - make references to other information in AI e.g. budgets, forecasts etc.
SPS
Ensure this in main body of report
Drills down 1 level from face of P+L in AUI analysing why the movements in AUI occurred
SPS 1: Revenue movement BECAUSE – consider revenue mix/ volume & price
SPS 2: Gross/ Operating margin movement BECAUSE – consider major cost movements
SPS 3: Other F.S. analysis (interest cover, inventory adj’s, impairments etc) and ethics
AJ
Why the movements in SPS occurred
Explaining why individual revenues streams went up/down
Compare overall performance to company targets/market; if cost of sales behaved differently from
revenue; impact of any accounting adjustments; impact on one-off costs of one-off events
NB: there is significant overlap between SPS & AJ in different mark schemes.
Therefore, overall E.G. revenue down by 6% representing £660k to £30m (AUI). This is because
growth in XYZ sector fell by 25% (SPS). This is caused by wider market contraction and reduced
advertising budget (AJ).
CR
Marks awarded for summarising your analysis and advising on way forward
Summarising: what happened to revenue/ GP/ OP & any adjustments – give figures
Recommendations: how to grow sales/ reduce costs and deal with other issues
