Paper F2 Financial Management: When It Comes to Tackling the Written Section of the Analysis and Interpretation Question, Too Many F2 Candidates Deny Themselves Easy Marks by Ignoring or Forgetting the Clear Prompts Provided

By Baker, Sally | Financial Management (UK), April 2013 | Go to article overview

Paper F2 Financial Management: When It Comes to Tackling the Written Section of the Analysis and Interpretation Question, Too Many F2 Candidates Deny Themselves Easy Marks by Ignoring or Forgetting the Clear Prompts Provided


Baker, Sally, Financial Management (UK)


The F2 paper always contains a 25-mark question requiring an analysis and interpretation. Jayne Howson's article in March's Study Notes focused on the typical ratio calculations called for by this question. Now it's time to focus on the written element of the answer.

The typical requirement is to "analyse the financial performance and financial position" of the company in the scenario for 20 marks, with five marks given for the limitations of ratio analysis or extra information required. Sometimes the requirement is preceded with "prepare a report". The number of candidates who do not follow this basic instruction always surprises me - if it's required, do it. You do not want to waste time producing a lengthy introduction, but at the same time you will be given credit for producing a report format, so don't let this easy mark slip through your fingers.

An appropriate format would be as follows:

Report

To:

From:

Subject:

Introduction

As requested, I have analysed the financial performance and position of ABC.

The mark allocations are there to guide you on how much time to spend on the question and, therefore, on how much you are expected to write. The requirement above is generally for 20 marks, of which up to eight are available for the ratio calculations. This means that there are 12 marks for the writing. On the whole, one mark will be awarded for each relevant point you make. For the maximum score, your answer must address the company's financial performance and its financial position. So, if you can make four or five good points on each of performance and position, you'll be doing well.

Construct your answer to fit in with this marking guide. Use headings that link to the requirement - e.g. "Financial performance", "Financial position" and "Recommendation" (if required). This will not only help to keep you focused and on track, it will also help the marker.

Start a new paragraph for each point you are making. Use no more than three sentences per paragraph and leave a line space between each paragraph. This helps you to focus on making a new point each time rather than simply repeating the same one over and over - another common error. It will also help your marker, as there is nothing worse for them than trying to decipher the different points being made if the answer is written as one long essay.

When practising this type of question, try writing your answer, going for a tea break and coming back after a while to read it. Does it say what you had in mind? I often find that students know what they are trying to explain, but can't get this down on paper. If the meaning is not clear to the marker, they cannot give you credit and, unfortunately, you won't be sitting with them to explain what you actually meant.

In one of her post-exam guides, the examiner makes the key point about scoring well on these questions: "Having said this many times in articles and presentations, I feel the need to reiterate a key consideration to passing the financial analysis question: please, please read the scenario and ensure that your answer is consistent with the scenario given."

The information provided is there specifically to help you. Use the reading time to highlight the key points and consider how these will affect the ratios and financial results. In the exam time, after you have calculated the ratios, take a few minutes to consider how a movement or difference can be linked back to the information in the question. You can then use this as the basis of your answer.

It is important that you say more than merely that the ratio has gone up/down or is higher/lower. …

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