CIMAPRA19-F02-1 Exam - Topic 1 Question 87 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 87
Topic #: 1

AB and CD are competitors supplying components to the car manufacturing industry. AB operates in Country X and CD operates in Country Y. Both entities were incorporated on the same day, are the same size and prepare financial statements to 31 March each year using international accounting standards.

Which of the following statements taken individually would limit the usefulness of the comparison of the return on capital employed ratio between the two entities?

AThe corporate tax rate is 25% in Country X and 40% in Country Y.

BThe average rate of inflation is 3% in Country X and 10% in Country Y.

CThe average rate of borrowing is 2% in Country X and 7% in Country Y.

DThecurrency is Dollar in Country X and Krona in Country Y.

Show Suggested Answer

Suggested Answer: A

by Cristy at May 09, 2024, 10:11 PM

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Lindy

6 months ago

Surprised by the borrowing rates, that's a huge gap!

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Ronnie

6 months ago

Wait, does currency really impact the ratio?

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Dulce

6 months ago

Inflation rates matter too, can't ignore that!

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Wayne

7 months ago

Totally agree, that affects profits directly.

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Margret

7 months ago

The tax rate difference is a big deal!

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Brendan

7 months ago

Currency differences in option D definitely complicate comparisons, but I feel like we focused more on financial metrics rather than exchange rates in our studies.

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Gail

7 months ago

I practiced a similar question where borrowing rates affected financial ratios, so I wonder if option C is also a limiting factor here.

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Franklyn

8 months ago

I’m not entirely sure, but I think inflation rates could impact the real return on capital employed, so option B could be a concern too.

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Cristal

8 months ago

I remember we discussed how different tax rates can affect profitability, so option A might really skew the comparison.

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Tawna

8 months ago

The currency difference is the obvious one that would make the comparison less meaningful. I'll go with that.

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Ashley

8 months ago

Okay, the key is to identify which factor would most limit the usefulness of the comparison. I'll need to weigh the pros and cons of each option.

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Stevie

8 months ago

Hmm, the different tax rates and inflation rates between the countries could definitely impact the comparison. I'll need to think this through carefully.

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Elvis

8 months ago

This question seems straightforward, I think I can handle it.

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Delmy

8 months ago

I'm a bit confused by the wording of the options. I'll need to double-check my understanding of iBGP and eBGP to make sure I pick the right answer.

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Katina

8 months ago

This one seems pretty straightforward. The Internet is built on TCP/IP, so I'm going with D.

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Domingo

8 months ago

This question seems straightforward - the IIA guidance is clear on the appropriate options for the chief audit executive. I'll carefully review each option and select the one that best aligns with the guidance.

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Lawana

8 months ago

This one's a bit tricky, but I think option B is the way to go. Setting the async option to true and handling errors/timeouts by omitting the widget seems like the best approach to keep the UI responsive. I don't want to risk blocking the main thread, so I'll steer clear of option A.

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Katlyn

1 year ago

Wait, they're both in the car parts business and have the same birthday? Sounds like a rom-com plot waiting to happen!

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Kayleigh

11 months ago

D) The currency is Dollar in Country X and Krona in Country Y.

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Rolande

11 months ago

C) The average rate of borrowing is 2% in Country X and 7% in Country Y.

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Lucille

11 months ago

B) The average rate of inflation is 3% in Country X and 10% in Country Y.

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Loren

12 months ago

A) The corporate tax rate is 25% in Country X and 40% in Country Y.

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Ettie

1 year ago

Different currencies? I bet the exchange rate fluctuations will make this comparison a real headache.

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Stefany

1 year ago

C) The average rate of borrowing is 2% in Country X and 7% in Country Y.

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Derick

1 year ago

B) The average rate of inflation is 3% in Country X and 10% in Country Y.

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Yuette

1 year ago

A) The corporate tax rate is 25% in Country X and 40% in Country Y.

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Kati

1 year ago

Borrowing at 7% in Country Y? No wonder they're not making as much profit as Country X. That's a huge difference!

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Linsey

1 year ago

Wow, 10% inflation in Country Y? That's going to make things tricky when trying to compare the financials.

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Daryl

1 year ago

The corporate tax rate difference between the two countries would definitely impact the comparison of return on capital employed. That's a clear limitation.

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