Question 4a
Examiners Report
Part (a) of question four required candidates to advise whether a divestment sale, made as a going concern or made through the sale of the assets of the business, would result in a greater borrowing capacity by the new, downsized company. Many candidates made a reasonable attempt at calculating the financial impact of each of the two options but few candidates were then able to calculate the impact on the debt capacity and the additional funds available to the downsized company.