Assessment Due Date Date submitted
Assessor Name
Student Declaration: I declare that this assessment is my own work. Any ideas and comments made by other people have been acknowledged as references. I understand that if this statement is found to be false, it will be regarded as misconduct and will be subject to disciplinary action as outlined in the TAFE Queensland Student Rules. I understand that by emailing or submitting this assessment electronically, I agree to this Declaration in lieu of a written signature.
Student Signature Date
Instructions to Student General Instructions:
This is an open book assessment and all resources may be used including the prescribed textbook and appropriate internet sites. In this case study you have the option to work closely with other members of your class through the use of Discussion board forums for online students and small discussion groups. You can also consult your assessor for guidance in some of the sections as required.
You are required to:
1. Complete and submit all assessment tasks by the due date.
2. Answer all questions in this booklet.
3. Write your responses in the blank pages which follow each question.
4. Write your name and student number in the space provided on this page.
5. Reference is to be made to the prescribed textbook for this subject and other sources including online research.
6. All materials used to answer questions must be referenced appropriately (listing sources).
7. This assignment presumes that you are working in a financial consulting firm. Therefore, all responses are to be presented in a professional manner.
8. You are required to read and analyse each question to formulate an informed response.
9. You must respond to each question using appropriate detail, working and calculations as though you are providing information to a client who does not have a thorough knowledge of business finance. One or two sentence answers will not be accepted
10. You are required to do additional research for answering the theory question. Please refer to the Supplementary Resources first, and if not enough , you can check the internet on appropriate educational sites
11. Save your document regularly to a USB or your computer as you work through this booklet.
12. Once you have answered all questions save this document to your computer or USB and then upload the document at the Assessment Centre.
Information / Materials provided:
Assessment booklet with questions 1-7
Assessment Criteria:
To achieve a satisfactory result, your assessor will be looking for your ability to demonstrate the following key skills/tasks/knowledge to an acceptable industry standard:
• Explain the key requirements of relevant corporations and consumer legislation?
• Explain what a business plan is?
• What the characteristics of a business plan are?
• Provide at least five reasons for writing a business plan?
• Prepare the cash budget?
• Design and present a client comparison financial performance report using Excel( attaching the excel File)
• Design a cover letter to address client queries on: operating cycle.
Number of Attempts:
You will receive up to two (2) attempts at this assessment task. Should your 1st attempt be unsatisfactory (U), your teacher will provide feedback and discuss the relevant sections / questions with you and will arrange a due date for the submission of your 2nd attempt. If your 2nd submission is unsatisfactory (U), or you fail to submit a 2nd attempt, you will receive an overall unsatisfactory result for this assessment task. Only one re-assessment attempt may be granted for each assessment task. For more information, refer to the Student Rules.
Submission details
(if relevant) Insert your details on page 1 and sign the Student Declaration. Include this form with your submission.
Due Date: Refer to Unit Study Guide and/or Learning Management System
Assessment to be submitted via
• TAFE Queensland Learning Management System: Connect url: https://connect.tafeqld.edu.au/d2l/login
• Username; 9 digit student number
• For Password: Reset password go to https://passwordreset.tafeqld.edu.au/default.aspx
Instructions to Assessor • This is an unsupervised written assessment.
• Students are required to complete all tasks.
• No time restrictions apply
• Students must complete their assessments as individuals
• Usual office WHS requirements should be met by students
• Physical conditions are at the students discretion
• Interactions with team members or supervisors should be limited to general instructions and clarification or explanation of the assessment requirements.
• Contingencies if conditions cannot be met are at the discretion of the Assessor.
Note to Student An overview of all Assessment Tasks relevant to this unit is located in the Unit Study Guide.
In this assessment you are required to read the case study provided and answer the questions that follow in Part A and Part B.
Case Study
Jolfa Ltd. is an Australian retailing company. Currently, Jolfa Ltd. only operates in Australia. The Balance Sheet and Income Statement for Jolfa Ltd. are given below.
Jolfa Ltd. Balance Sheet
as at 30 June, 2015
Current Assets $ ‘000 $ ‘000
Cash 50
Accounts Receivable 80
Inventory 120 250
Non-Current Assets
Plant and equipment 950
Land and Building 1100
Goodwill 140 2190
Total Assets 2440
Current Liabilities
Accounts Payable 280
Provn for Long Service Leave 85 365
Non-Current Liabilities
Debentures 550
Mortgage loan 220 770
Total Liabilities 1135
Net Assets $1305
Equity
Share Capital:
1,150,000 ordinary shares issued at $1.00 1150
Retained earnings 155
Total Equity $1305
Additional information
? Current share price is $1.55
? Most recent dividend was $0.05 per share. Dividends are expected to grow by 7% per year.
? 550 Debentures were issued with a face value of $1,000 trading at par value of 8.5%
? The mortgage loan is currently at a variable rate of 8.9%.
Jolfa Ltd. Income Statement
for the Year Ended 30 June 2015
$ ‘000 $ ‘000
Total Sales 2310
Less cost of goods sold
Opening Inventory 220
Purchases 1620
Goods available for sale 1840
Less closing Inventory 120 1720
Gross Profit 590
Less operating expenses
Depreciation 110
Interest 90
Rent 30
Wages 150
Advertising/marketing 20
Other 40
Total Expenses 440
Net Profit before tax 150
Tax 45
Net Profit After Tax 105
Industry standards/benchmarks
Current Ratio 1.45:1
Liquid Ratio 1.06:1
Debt to Equity ratio 160%
Earnings per Share $0.45 per share
P/E ratio 15
Return on Equity 10.5%
Net Profit Ratio 22%
Times Interest Covered 4 times
Dividend Payout ratio 20%
PART A
Part A consists of four (4) Tasks, A1, A2, A3, A4. Read the Tasks, which refer to the case study above, and record your answers in the blank pages which follow.
Task A1
a) From the information provided calculate the:
i. Current Ratio
ii. Liquid Ratio
iii. Debt to Equity ratio
iv. Earnings Per Share
v. P/E ratio
vi. Return on Equity
vii. Net Profit ratio
viii. Times interest covered
ix. Dividend Payout Ratio
b) Prepare a report to the management of Jolfa Inc in which you discuss each of the ratios from above. Compare the ratios to the industry standards given.
Industry Standards are used as Jolfa’s agreed criteria
Provide management with some ideas as to how the company could improve the ratios so that the majority are above the industry standards. How would improving these ratios benefit the company? Keep in mind that your suggestions may improve some ratios and worsen others.
Task A2
As a financial manager you would use many different types of products (i.e. for example Money Market magazines, etc.) to source information on borrowings, investments and any new opportunity available to the business.
Briefly identify and categorise sources of information on financial markets and products that you could access.
Task A3
a) Jolfa Ltd. is considering opening a new outlet in China. It has estimated future cash flows and based on these it has decided that the new outlet will be a profitable investment. Research the possible risks that the company might face if this new outlet is opened in China.
Make a PowerPoint presentation of your findings that would be suitable for presenting to Jolfa Management. Note: Please make reference to the following government website for this task:
Exploring goods or services overseas – what you need to know.
Task A4
Calculate the WACC of Jolfa Inc using the above information. Assume a company tax rate of 30%.
Note: All calculations should be made to at least three decimal places in parts a) and e) above.
PART B – Case Study
Part B consists of two tasks, B1 and B2. Read the Tasks and record your answers in the pages that follow.
Task B1
Jolfa Ltd is also considering the following investment project:
Capital outlay $200,000
Net Profit p.a. (before depreciation and tax) $ 90,000
Depreciation p.a. $ 40,000
Economic life: 5 years
Salvage value: Zero
Tax rate payable (assume paid in year of income): 30%
Required rate of return: 12% (WACC + Risk factor)
Calculate the following:
i. The Net Profit after Tax for each year.
ii. The Annual Cash Flow for each year.
iii. Accounting Rate of Return (using total investment).
iv. Payback Period.
v. Net Present Value.
vi. Internal Rate Of Return
Task B2 – Multiple Choice:
Select the answer that would correctly complete the following sentence.
Evaluating projects on an Independent Basis (rather than Mutually Exclusive) and using NPV evaluation method means you would:
¨ Choose the individual project with the highest NPV (Net Present Value).
¨ Choose the individual project with the highest ARR.
¨ Choose all projects with a positive NPV.
¨ Choose all projects with an ARR greater than the W.A.C.C.
¨ None of the above
