CIMAPRA19-F02-1 Exam - Topic 2 Question 106 Discussion

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

Question #: 106
Topic #: 2

PQis a retail business.In recent years they have improved their financial performance andincreased their revenue. The following ratios have been calculated for the years ended 31 December20X4 and 20X3:

Which of the following explanations of PQ's financial performanceis consistent with these ratios?

AIn 20X4 PQ reduced the unit selling price resulting in an increase in volumes sold and an increase in overall revenue.

BPQ changed suppliers early in 20X4 because the new supplieragreed tosupply the same goods at a cheaper price.

CIn 20X4taxation legislation wasamended which reduced the rate of corporate income tax by 3.5%.

DIn 20X4 PQ sold a retail outlet resulting in a significantgain on disposal which has beendeducted from administrative expenses.

Show Suggested Answer

Suggested Answer: A, B, C, D

by Latricia at Jan 22, 2025, 03:37 AM

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Quinn

3 months ago

Lower prices usually boost sales, so A could work too.

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Edmond

3 months ago

Selling a retail outlet? That seems risky for growth!

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Rhea

3 months ago

Really? A tax cut could explain it too, but I'm not convinced.

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Alton

4 months ago

I think option B makes the most sense here.

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Louvenia

4 months ago

PQ's revenue went up, that's a good sign!

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Herschel

4 months ago

Selling a retail outlet sounds like a big move, but I’m not clear on how that would affect their overall financial performance as mentioned in option D.

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Amina

4 months ago

I recall a practice question about tax impacts on profitability, so option C could be relevant if they had lower tax expenses.

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Vivienne

4 months ago

I’m not entirely sure, but I think changing suppliers could affect costs significantly, which might relate to option B.

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Stephane

5 months ago

I remember studying how pricing strategies can impact revenue, so option A might make sense if they sold more units.

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Latrice

5 months ago

This is the kind of question I love! Analyzing financial data and figuring out the story behind the numbers - it's like solving a puzzle. I'm feeling confident I can nail this one.

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Joaquin

5 months ago

Ugh, financial ratio analysis is not my strong suit. I'm going to have to really focus on this one and make sure I don't miss any important details. Wish me luck!

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Marcelle

5 months ago

Okay, I think I've got a handle on this. The key is to look at how the ratios changed from one year to the next and see which explanation aligns best with that. Time to put on my analytical hat!

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Dalene

5 months ago

Hmm, not sure about this one. The ratios don't seem to give a clear picture of what's going on. I'll have to think through each option carefully to see which one best fits the information provided.

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Tandra

5 months ago

This looks like a straightforward financial analysis question. I'll need to carefully review the ratios provided and consider how they could be impacted by the different explanations given.

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Nan

9 months ago

Hold up, 'PQ'? Seriously, that's the best they could come up with for a company name? I bet the employees just call it 'Pee-Cue' behind the boss's back.

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Carylon

10 months ago

Wait, so PQ is a retail business and they're talking about 'administrative expenses'? I didn't know shop owners needed to worry about all that fancy accounting stuff!

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Miss

10 months ago

Option C, really? A 3.5% tax cut is nice, but I doubt that alone would account for this level of revenue growth. Sounds like a bit of a stretch to me.

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Cherrie

8 months ago

C) In 20X4 taxation legislation was amended which reduced the rate of corporate income tax by 3.5%.

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Mireya

8 months ago

B) PQ changed suppliers early in 20X4 because the new supplier agreed to supply the same goods at a cheaper price.

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Thurman

9 months ago

A) In 20X4 PQ reduced the unit selling price resulting in an increase in volumes sold and an increase in overall revenue.

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Lore

10 months ago

I don't know, option B about changing suppliers sounds a bit too simple. Wouldn't that just shift the costs around rather than improve the bottom line? I'd be cautious about picking that one.

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Myong

9 months ago

I) I agree, changing suppliers might not have a significant impact on the bottom line. It's better to consider other options.

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Reita

9 months ago

C) In 20X4 taxation legislation was amended which reduced the rate of corporate income tax by 3.5%.

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Hyman

9 months ago

A) In 20X4 PQ reduced the unit selling price resulting in an increase in volumes sold and an increase in overall revenue.

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Phung

10 months ago

Option D seems plausible too. A significant gain on disposal could definitely boost the revenue numbers. Although the wording is a bit vague, so I'd want to double-check the details.

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Desmond

9 months ago

It's hard to say for sure without more information. We should look into the details before making a decision.

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Benedict

9 months ago

True, but option C is also a possibility. A decrease in corporate income tax could impact the financial performance.

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Lorrie

9 months ago

I agree, but option D also seems likely. Selling a retail outlet could bring in a big gain.

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Sylvie

10 months ago

I think option A makes sense. Lowering the selling price could attract more customers.

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Elke

11 months ago

Hmm, I'm leaning towards option A. The increase in revenue and volumes sold points to a price reduction strategy. But I'd need more info on the inventory turnover and gross margin to be sure.

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