Questions for Assessment 1
The first assignment is a group coursework assignment constitutes 30% of the assignment for this module. Students are required to write a report by completing the questions. (Maximum 2000 words).
Based on your understanding, you are required to discuss and explain in details the following financial concepts.
Q1. Discuss and explain by comparing and contrasting the main features of a limited company (10 marks) est. 200 words
Q2. Discuss and perform a horizontal analysis by comparing and contrasting a limited company’s primary financial statements (20 marks)
Q3. Discuss and interpret the cash flow statement of a limited company (20 marks)
Q4. Discuss and explain what is (10 marks)
Q5. Discuss the ethical issues faced by managers (20 marks)
Q6. Both John and Mark operate wholesale electrical stores throughout the UK. The financial Statement of each business for the year ended 31 December last year are as follows:
Statements of financial position as of 31 December last year
John Mark
$m $m
ASSETS
Non-current assets
Property, plant and equipment
(Cost less depreciation)
Land and buildings 360.0 510.0
fixtures and fittings 87.0 91.2
--------- ---------
447.0 601.2
--------- ---------
Current assets
Inventories 592.0 403.0
Trade receivables 176.4 321.9
Cash at bank 84.6 91.6
------------ -----------
853.0 816.5
------------ -----------
Total assets 1,300.0 1,417.7
------------ -----------
EQUITY AND LIABILITIES
Equity
$1 ordinary' shares 320.0 250.0
Retained earnings 367.6 624.6
----------- -----------
687.6 874.6
----------- -----------
Non-current liabilities
Borrowings — Loan notes 190.0 250.0
----------- -----------
Current liabilities
Trade payables 406.4 275.7
Taxation 16.0 17.4
----------- ----------
422.4 293.1
----------- -----------
Total equity and liabilities 1,300.0 1,417.7
_______ _______
Income statements for the year ended December last year
John Mark
$m $m
Revenue 1,478.1 1,790.4
Cost of sales (1,018.3) (1,214.9)
------------- -------------
Gross profit 459.8 575.5
Operating expenses (308.5) (408.6)
------------- -------------
Operating profit 151.3 166.9
Interest payable (19.4) (25.5)
------------- -------------
Profit before taxation 131.9 139.4
Taxation (32.0) (34.8)
------------- -------------
Profit for the year 99.9 104.6
________ ________
All purchases and sales were on credit. The market values of a share in John and Mark at the end of the year were $6.50 and $8.20 respectively.
Calculate and discuss the various ratio analysis based on (20 marks)
6a. Profitability ratios
6b. Efficiency ratios
6c. liquidity ratios
6d. gearing ratios
Questions for Assessment 2 (est. 3000)
(est. 1200)
Part A à long term investment plans à 长期资产投资计划(方法)à non-current assets investments
Q1. Michael plc is considering buying some equipment to produce a chemical named X14. The new equipment's capital cost is estimated at $100 million. If its purchase is approved now, the equipment can bé bought and production can commence by the end of this year, $50 million has already been spent research and development work. Estimates of revenues and costs arising from the operation of the new equipment are:
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Sales price ($/litre)
|
100 |
120 |
120 |
100 |
80 |
Sales volume (million litres)
|
0.8 |
1.0 |
1.2 |
1.0 |
0.8 |
Variable cost ($/litre)
|
50 |
50
|
40 |
30 |
40 |
Fixed cost ($m)
|
30 |
30 |
30 |
30 |
30 |
If the equipment is bought, sales of some existing products will be lost resulting in a loss of contribution of $15 million a year, over the life of the equipment.
The accountant has informed you that the fixed cost includes depreciation of $20 million a year the new equipment. It also includes an allocation of $10 million or fixed over-heads. A separate study has indicated that if the new equipment were additional overheads, excluding depreciation, arising from producing that the chemical would be $8 million a year. Production would require additional working capital of $30 million.
For the purposes of your initial calculations ignore taxation.
Required:
(a) Deduce the relevant annual cash flows associated with buying the equipment.
(b) Deduce the payback period.
(c) Calculate the net present value using a discount rate of 8 per cent.
(d) Explain (1) what is net present value investment appraisal method, (2) payback accounting rate of return and (3) internal rate of return
(Hint: You should deal with the investment in working capital by treating it as a cash outflow at the start of the project and an inflow at the end.)
Part B (est. 1800 words)
Q2: Demonstrate a critical awareness of how management provides the basic for determining appropriate financial strategies and policies for a company
Q3: Use quantitative models and their independent judgement to analyse financial decisions and recommend feasible options that managers can implement
Q4: Carry out a systematic and detailed analysis of a company’s performance (profitability) using information from annual reports and accounts, databases and the internet.
Q5: Demonstrate an understanding and use the appropriate analytical techniques to be applied to decisions involving the raising of finance, the use of funds or investment projects and the distribution of funds to investors. Based on James, Distributor of foods
James, Distributor of foods (case study) Revised
March 23 Semester AC7052 SR Assessment 2
The financial statements of James a distributor of foods, the year ended 31 December last year are:
Income statement for the year ended 31 December last year
|
$000 |
$000 |
Sales revenue |
|
820 |
Cost of sales
|
|
|
Opening inventories |
142 |
|
Purchases |
568 |
|
|
710 |
|
Closing inventories |
(166) |
(544) |
Gross profit |
|
276 |
Administration expenses |
|
(120) |
Distribution expenses |
|
(95) |
Operating profit |
|
61 |
Financial expenses |
|
(32) |
Profit before taxation |
|
29 |
Taxation |
|
(7) |
Profit for the year |
|
22 |
|
|
|
Statement of financial position as at 31 December last year
|
$000 |
ASSETS
|
|
Non-current assets |
|
Property, plant and equipment |
364 |
|
|
Current assets |
|
Inventories |
166 |
Trade receivables |
264 |
Cash |
24 |
|
454 |
Total assets |
818 |
|
|
EQUITY AND LIABILITIES |
|
Equity |
|
Ordinary share capital |
300 |
Retained earnings |
352 |
|
652 |
Current liabilities |
|
Trade payable |
159 |
Taxation |
7 |
|
166 |
Total equity and liabilities |
818 |
|
|
All purchases and sales are on credit. There has been no change in the level of trade receivable or payables over the period.
Calculate the length of the operating cash cycle (OCC) for the business.
https://apaxresearchers.com/storage/files/2023/05/03/9667-qLn_12_04_42_lesson-8-full-costing.pptx
https://apaxresearchers.com/storage/files/2023/05/03/9667-m3e_12_03_35_lesson-9-budgeting.pptx
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