Chartered Institute of Management Accountants (CIMA) Case Study Examinations (Integrative Competence) Syllabus

How is Return on Capital Employed (ROCE) calculated?

$\text{ROCE} = \frac{\text{Operating profit (PBIT)}}{\text{Capital employed}} \times 100$, where capital employed = equity + non-current liabilities.

Give the gearing ratio on a debt-to-capital basis.

$\text{Gearing} = \frac{\text{Debt}}{\text{Debt} + \text{Equity}} \times 100$ (alternatively expressed as Debt/Equity).

What is the interest cover ratio and what does it measure?

$\text{Interest cover} = \frac{\text{PBIT}}{\text{Finance costs}}$; it measures how many times profit covers interest, indicating solvency risk.

State the working capital (cash operating) cycle.

$\text{Inventory days} + \text{Receivables days} - \text{Payables days}$.

Give the formulas for inventory days, receivables days and payables days.

Inventory $= \frac{\text{Inventory}}{\text{Cost of sales}} \times 365$; Receivables $= \frac{\text{Trade receivables}}{\text{Credit sales}} \times 365$; Payables $= \frac{\text{Trade payables}}{\text{Credit purchases}} \times 365$.

How is basic Earnings Per Share (EPS) calculated under F2?

$\text{EPS} = \frac{\text{Profit attributable to ordinary shareholders}}{\text{Weighted average number of ordinary shares}}$.

How is goodwill on acquisition computed in a consolidation (F2)?

Consideration transferred $+$ non-controlling interest $-$ fair value of net identifiable assets acquired.

State the Net Present Value (NPV) formula and its decision rule.

$\text{NPV} = \sum_{t=0}^{n} \frac{CF_t}{(1+r)^t}$; accept the project if $\text{NPV} > 0$.

Define the Internal Rate of Return (IRR) and give its interpolation estimate.

The discount rate at which $\text{NPV} = 0$; accept if IRR > cost of capital. $\text{IRR} \approx a + \frac{NPV_a}{NPV_a - NPV_b}(b - a)$.

State the Weighted Average Cost of Capital (WACC) formula.

$\text{WACC} = \frac{E}{E+D}\,k_e + \frac{D}{E+D}\,k_d(1-T)$, where $T$ is the corporate tax rate.

Give the CAPM formula for the cost of equity (F3).

$k_e = R_f + \beta(R_m - R_f)$, where $R_f$ = risk-free rate and $(R_m - R_f)$ = market risk premium.

State the dividend growth (Gordon) model for share valuation.

$P_0 = \frac{D_0(1+g)}{k_e - g} = \frac{D_1}{k_e - g}$, valid where $k_e > g$.

How is the post-tax cost of irredeemable debt calculated?

$k_d = \frac{i(1-T)}{P_0}$, where $i$ = annual interest, $T$ = tax rate and $P_0$ = ex-interest market price.

How is expected value used to evaluate risky outcomes (P3)?

$EV = \sum p_i x_i$ — the probability-weighted average of possible outcomes.

State the learning curve formula and the exponent (P2).

$Y = aX^{b}$, where $Y$ = average time per unit for $X$ units, $a$ = time for the first unit, and $b = \frac{\ln r}{\ln 2}$ with $r$ = learning rate.

Define target cost and the cost gap (P2 decision making).

$\text{Target cost} = \text{Target selling price} - \text{Required profit margin}$; the cost gap $= \text{Current expected cost} - \text{Target cost}$, to be closed by cost reduction.

What does the PESTEL framework analyse (E3)?

The macro-environment: Political, Economic, Social, Technological, Environmental and Legal factors.

List Porter's Five Forces.

Competitive rivalry, threat of new entrants, threat of substitutes, bargaining power of buyers, and bargaining power of suppliers.

What four strategies make up the Ansoff matrix?

Market penetration, market development, product development and diversification (existing/new products against existing/new markets).

Name the four categories of the BCG matrix and its two axes.

Stars, cash cows, question marks and dogs; axes are market growth rate (vertical) and relative market share (horizontal).

List the primary activities in Porter's value chain (E3).

Inbound logistics, operations, outbound logistics, marketing & sales, and service; supported by firm infrastructure, HRM, technology development and procurement.

Give the sales price and sales volume (contribution) variance formulas.

Price $=(\text{Actual price} - \text{Std price}) \times \text{Actual units}$; Volume $=(\text{Actual units} - \text{Budgeted units}) \times \text{Std contribution per unit}$.

State the fixed overhead expenditure and volume variances under absorption costing.

Expenditure $= \text{Budgeted fixed overhead} - \text{Actual fixed overhead}$; Volume $=(\text{Actual output} - \text{Budgeted output}) \times \text{OAR}$.

How is Return on Equity (ROE) calculated?

$\text{ROE} = \frac{\text{Profit after tax (less preference dividends)}}{\text{Ordinary shareholders' equity}} \times 100$.

In the management-level role, distinguish 'decision support' from 'control'.

Decision support is forward-looking information aiding choices (pricing, investment, make-or-buy); control compares actual results against plan via variance analysis and triggers corrective action.

What does it mean to answer a case study 'in role'?

Write as the simulated finance professional addressing the scenario's stakeholders, applying knowledge to that specific company and situation rather than giving generic textbook answers.

What is the recommended approach to time allocation in a case study exam?

Allocate time to each task in proportion to its marks/weighting within the three hours, and watch the on-screen task weightings to avoid over-running on low-mark tasks.

Why does CIMA emphasise integration across the E, F and P pillars in case studies?

Real finance roles require combining enterprise, financial and performance skills simultaneously, so case study tasks deliberately blend the three pillars rather than testing them in isolation.

What is the purpose of the pre-seen material released before a case study exam?

It lets candidates research the simulated company and its industry in advance, so exam-day tasks can focus on application, analysis and judgement using new unseen information.

Contrast the focus of the Operational Case Study with the Strategic Case Study.

OCS (Finance Officer) centres on short-term, transactional and operational decisions and control; SCS (adviser to the board) centres on long-term strategy, financial strategy and enterprise-wide risk.