TASK DESCRIPTION
ASSESSMENT – (Length: 4000 words for both part). Font size: 12 Times New Roman or Arial. Spacing: Double Spacing. Reference: Harvard Style. Structure: Essay Style
Part 1
Select a company whose shares are traded on the London Stock Exchange and is part of the FTSE 100 Index. Download its most recent annual report(s) covering the financial statements for the last 2 years. As an alternative, you may select the company by whom you are employed. References Style: Harvard – Minimum Refs. for this part is 20 from journal, Text Books, Periodics, websites etc.
Required:
You are required to present a business report to the directors of the company. Within your report you should:
• Calculate profitability, liquidity, gearing and efficiency and investor ratios for a minimum of the past 2 years.
• Critically evaluate the ratios calculated. In your analysis. You should consider possible reasons for changes in ratios over the period and discuss the limitations of ratio analysis.
• Based on your analysis, make recommendations on how to improve the financial management of the company.
• Ensure you include a copy of the financial statements of the company chosen in an appendix to your report. Also, include an appendix showing your calculations for the ratios selected.
(40%)
(Report length 2,000 words) due date: 14/03/22
*Under this assessment part, you are required to write down a separate 2 page Summary of your report and submit your written summary with a 10mins Audio or Video Podcast of how you communicate summary of your report. This should be uploaded to Moodle. All students are required to comment on a minimum of 2 other students; podcasts via the online discussion forums. (10%)
Part 2
Scottie Ltd is appraising an investment project which has an expected life of four years and which will not be repeated. The initial investment in the required machinery, payable at the start of the first year of operation, is $820,000. Scrap value of this machinery of $120,000 is expected to arise at the end of four years.
The project also utilises a special calibrator which cost $18,000 three years ago and has a current disposal value of $9,000. If used in the project, it is estimated that the disposal value in four years’ time will be $6,000.
There is some uncertainty about what price can be charged for the units produced by the investment project. The following forecast of selling prices and their probabilities has been prepared:
Future Economic State Weak Medium Strong
Probability of future economic state 25% 40% 35%
Selling price in current price terms $22 per unit $28 per unit $32 per unit
These selling prices are expected to be subject to annual inflation of 2% per year, regardless of which economic state prevails in the future.
Forecast sales and production volumes have already been forecast, as follows:
Year 1 2 3 4
Sales and production (units) 15000 22000 33000 41000
The variable cost of the product, in current price terms, will be $14 per unit. Variable cost inflation is expected to be 5% per year.
Incremental overheads of $46,000 per year in current price terms will arise as a result of undertaking the investment project. A large proportion of these overheads relate to energy costs which are expected to increase sharply in the future because of energy supply shortages, so overhead inflation of 6% per year is expected.
Producing and selling the product will call for increased investment in working capital. Analysis indicates that, at the start of each year, investment in working capital will need to be 6% of revenue for that year.
It has already been decided that when work on this project ceases, this production department will be closed. Redundancy and severance pay has been estimated at $15,000 now, or $35,000 in four years’ time.
The initial investment in the machine will attract capital allowances on a straight-line basis over the four-year project life. The rate of corporation tax is 22% and tax liabilities are paid in the year in which they arise. Scottie Ltd has traditionally used a nominal after-tax discount rate of 8% per year for investment appraisal.
Work to the nearest $’000.
Required:
Write a business report to the directors of Scottie Ltd explaining whether the company should undertake the project or look for other opportunities. The report should incorporate the following:
a. An evaluation of the investment option using the net present value (NPV) technique
b. Find the approximate internal rate of return (IRR)
c. Interpret your results for management, to include: –
i. A presentation of the theoretical arguments for the choice of net present value as the best method of investment appraisal.
ii. Explain the continued popularity among decision makers of non-discounting methods of investment appraisal.
iii. Identify what other factors should be considered before an investment decision is made.
d. advise the Board of Scottie Ltd how the proposed investment programme might be financed, identifying the main sources of finance available, critically assessing the main advantages and disadvantages of each.
(40%)
(Report length 2,000 words) Due date: 14/03/22
Exceptional engagement with an extensive range of relevant and credible literature, informed by the latest research. High-level referencing skills consistently and professionally applied. Harvard Style Referencing.
Exceptional mastery of a complex and specialised area of knowledge. An exceptionally critical awareness of current problems and/or new insights. An outstanding understanding of the concepts of the subject, well-informed by current research and scholarship. A critical, sophisticated and nuanced awareness of how the boundaries of knowledge are advanced through research.
Exceptional critical evaluation/ critique of current research and methodologies, Proposes innovative hypotheses, where appropriate. Exemplary systematic and creative synthesis of complex issues.
Ability to investigate contradictory or incomplete information and make strong, persuasive, arguments and sophisticated, nuanced, judgements. Potential for journal publication or doctoral research.
Exceptional application skills in complex, unpredictable, contexts, drawing skilfully on the latest research within the discipline. Can identify complex problems and propose sophisticated, original solutions.
An outstanding application of techniques applicable to own research or advanced scholarship.
Shows originality in application of knowledge and techniques, and of how established techniques of enquiry create and interpret knowledge in the discipline with assimilation and development of cutting edge processes and techniques.
Can communicate with an exceptionally high level of professionalism.
Work is remarkably coherent, very fluent and is presented professionally. Can work outstandingly well and professionally within a team, showing advanced leadership skills. Demonstrates exemplary professional, postgraduate employment skills and a strong appetite for further development. References Style: Harvard – Minimum Refs. for this part is 15 from journal, Text Books, Periodics, websites etc.
• NOTE: All parts must be treated entirely differently like new work *
Part 3
Required: Active participation on the weekly forum discussions. No Refs required. Due date: 07/03/22 (10%)
GUIDANCE FOR STUDENTS IN THE COMPLETION OF TASKS
NOTE: The guidance offered below is linked to the five generic assessment criteria overleaf.
1. Engagement with Literature Skills
Your work must be informed and supported by scholarly material that is relevant to and focused on the task(s) set; you should make use of scholarly reviews and primary sources, as appropriate (for example, refereed research articles and/or original materials appropriate to the discipline). You should provide evidence that you have accessed a wide range of sources, which may be academic, governmental and industrial; these sources may include academic journal articles, textbooks, current news articles, organisational documents, and websites. You should consider the credibility of your sources; academic journals are normally highly credible sources while websites require careful consideration/selection and should be used sparingly. Any sources you use should be current and up-to-date, mostly published within the last five years or so, though seminal/important works in the field may be older. You must provide evidence of your research/own reading throughout your work, using correctly a suitable referencing system, including in-text citations in the main body of your work and a reference list at the end of your work.
Guidance specific to this assessment: Application and critical discussion of the various techniques and methods used to assess the performance of a business and capital appraisal models and the sources of finance available. As a guide a minimum of 25 credible sources should be provided.
2. Knowledge and Understanding Skills
At level 7, you should be able to demonstrate a systematic understanding of knowledge, and a critical awareness of current problems and/or new insights, much of which is at, or informed by, the forefront of your academic discipline, field of study or area of professional practice, with a comprehensive understanding of techniques applicable to your own research or advanced scholarship. Your work must demonstrate your growing mastery of these concepts, principles, current challenges, innovation and insights associated with the subject area. Knowledge relates to the facts, information and skills you have acquired through your learning. You demonstrate your understanding by interpreting the meaning of the facts and information (knowledge). This means that you need to select and include in your work the contemporary concepts, techniques, models, theories, etc. appropriate to the task(s) set. You should be able to explain the theories, concepts, etc. meaningfully to show your understanding. Your mark/grade will also depend upon the extent to which you demonstrate your knowledge and understanding; ideally each should be complete and detailed, with comprehensive coverage.
Guidance specific to this assessment: Research the various techniques and methods used to assess the performance of a business and capital appraisal models and the sources of finance available.
3. Cognitive and Intellectual Skills
You should be able to: evaluate critically current research and advanced scholarship in the discipline; evaluate methodologies and develop critiques of them and, where appropriate, to propose new hypotheses; deal with complex issues both systematically and creatively to make sound judgements in the absence of complete data. Your work must contain evidence of logical, analytical thinking, evaluation and synthesis. For example, to examine and break information down into parts, make inferences, compile, compare and contrast information. This means not just describing what! But also justifying: Why? How? When? Who? Where? At what cost? At all times, you must provide justification for your arguments and judgements. Evidence that you have reflected upon the ideas of experts within the subject area is crucial to you providing a reasoned and informed debate within your work. Your choice of methodologies to gather data and information must be rigorously defended. Furthermore, you should provide evidence that you are able to make sound judgements and convincing arguments using data and concepts. Sound, valid, persuasive conclusions are necessary and must be derived from the content of your work. Where relevant, alternative solutions and recommendations may be proposed.
Guidance specific to this assessment: Provision of coherent, structured analysis and conclusions based upon the content provided. Following on from the analysis and conclusions a set of recommendations which address the issues/problems raised in the report covering financial performance and capital project decision(s).
4. Practical Skills
At level 7, you should be able to demonstrate originality in the application of knowledge, together with a practical understanding of how established techniques of research and enquiry are used to create and interpret knowledge in the discipline. This includes acting autonomously in planning and implementing tasks at a professional or equivalent level, originality in tackling and solving problems, and decision-making in complex and unpredictable contexts or situations.
You should be able to demonstrate mastery of the leading edge subject-related concepts and ideas as they relate to real world situations and/or particular contexts. How do they work in practice? You will deploy models, methods, techniques, and/or theories, in those contexts or circumstances, to assess current situations, perhaps to formulate plans or plausible, justifiable recommendations to solve problems, or to propose new models, or to create artefacts, which may be innovative and creative, thereby demonstrating your understanding of how the boundaries of knowledge are advanced through research and/or application. This is likely to involve, for instance, the use of real world artefacts, examples and cases, the application of a model within an organisation and/or benchmarking one theory or organisation against others.
Guidance specific to this assessment: Use of the range of ratios and their trends to provide comprehensive comment and analysis of the financial performance, covering the following five areas of Profitability; Liquidity: Efficiency: Investment and Gearing
The results of the above ratios should be linked in order to provide a comprehensive review of financial performance.
Research and apply appropriate capital appraisal techniques, and sources of finance available.
5. Transferable Skills for Life and Professional Practice
Your work must provide evidence of the qualities and transferable skills necessary for postgraduate-level employment in circumstances requiring sound judgement, personal responsibility and initiative in complex and unpredictable professional environments. This includes demonstrating: the independent learning ability for continuing professional development to advance existing skills and acquire new competences of a professional nature that will enable you to assume significant responsibility within organisations; that you can initiate and complete tasks, projects and procedures, whether individually and/or collaboratively, to a professional level; that you can use appropriate media to effectively communicate information, arguments and analysis in a variety of forms for a variety of audiences; fluency of expression; clarity and effectiveness in presentation and organisation. Work should be coherent and well-structured in presentation and organisation.
Guidance specific to this assessment: Structure and presentation of a professional report (follows conventions in terms of layout and appropriate sections including correct spelling, grammar, punctuation, flow of narrative/fluency, coherence.
READING LIST
Module Code BMMB7005 / BMMB7005D
Module Title Finance for Business Managers
Classification Reading List entry Electronic*
Essential Atrill, P. (2017) Financial Management for Decision Makers, 8th edition, Pearson ?
Essential Bekaert, G. (2017) International Financial Management, 3rd edition, Cambridge University Press ?
Further Bhimani, A. (2017), Financial Management for technology Start-ups: A Handbook for Growth, Kogan Page ?
Further Drury, C. (2015), Management and Cost Accounting, 9th edition, Cengage ?
Further Financial Institutions Management: a Risk Management Approach, New York: McGraw Hill ?
Further Financial Management (CIMA) ?
Further Journal of Accounting, Finance & Management Strategy ?
Further Journal of Finance ?
Further Kersten, R. et al (2017), Small Firms, large Impact? A systematic review of the SME Finance Literature, World Development, September 2017, Vol.97, pp.330-348 ?
Level 7
In accordance with the Framework for Higher Education Qualifications, at the end of Level 7 students should be able to demonstrate: a systematic understanding of knowledge, and a critical awareness of current problems and/or new insights, much of which is at, or informed by, the forefront of their academic discipline or area of professional practice; a comprehensive understanding of techniques applicable to their own research or advanced scholarship; originality in the application of knowledge, together with a practical understanding of how established techniques of research and enquiry are used to create and interpret knowledge in the discipline; conceptual understanding that enables the student to evaluate critically current research and advanced scholarship in the discipline to evaluate methodologies and develop critiques of them and, where appropriate, to propose new hypotheses. They will be able to deal with complex issues both systematically and creatively, make sound judgements in the absence of complete data, and communicate their conclusions clearly to specialist and non-specialist audiences. They will demonstrate self-direction and originality in tackling and solving problems, and act autonomously in planning and implementing tasks at a professional or equivalent level to continue to advance their knowledge and understanding, and to develop new skills to a high level. They the qualities and transferable skills necessary for employment requiring the exercise of initiative and personal responsibility; decision-making in complex and unpredictable situations/professional environments; and the independent learning ability required for continuing professional development.
Terminology Changes Following the Introduction of FRS 102 – Updated September 2017
Company law terminology FRS 102 terminology
Accounting reference date Reporting date
Accounts Financial Statements
Associated undertaking Associate
Balance sheet Statement of Financial Position
Capital and reserves Equity
Cash at bank and in hand Cash
Cash Flow Statement Statement of Cash Flows
Debtors Trade Receivables
Diminution in value [of assets] Impairment
Financial year Reporting period
Group [accounts] Consolidated [financial statements]
IAS EU-adopted IFRS
Individual [accounts] Individual [financial statements]
Interest payable and similar charges Finance costs
Interest receivable and similar income Finance income/Investment income
Minority Interests Non-controlling Interest
Net Realisable Value [of any current asset] Estimated selling price less costs to complete and sell
Parent undertaking Parent
Profit and Loss Account
Income statement (under the two-statement approach) Part of the Statement of Comprehensive Income (under the single- statement approach)
Related Undertakings Subsidiaries, associates and joint ventures
Statement of Total Recognised Gains and Losses (STRGL) Statement of Changes in Equity
Stocks Inventories
Subsidiary Undertaking Subsidiary
Tangible Assets Includes: Property, plant, equipment, investment property
Trade Creditors Trade Payables
BUISNESS REPORT STRUCTURE
You need to create a separate report for each part of the assignment with separate References (Each part should contain minimum of 25 listed mixed of journal articles, reports, websites, textbooks, news reports or business Times mags etc).
EXECUTIVE SUMMARY
INTRODUCTION
MAIN BODY (Excellent application of evidence based case facts and applying theory to practical examples will attract greater marks).
CONCLUSION
RECOMMENDATIONS
