1. Research, apply and evaluate a variety of financial assessment techniques for application to a case study.
2. Research, evaluate and critically discuss various issues and theoretical frameworks used in the management and control of financial resources.
3. Analyse, interpret and critically assess the financial position of a business, incorporating conclusions/recommendations and advice to managers/directors.
4. Use a variety of techniques in the provision of managerial and financial information. Evaluate, assess and advise on issues highlighted from the information generated. Critically evaluate relevant aspects of techniques applied.
TASK DESCRIPTION
For this assignment, you will be conducting a variety of financial analysis and preparing two (2) business reports, outlining your analysis and recommendations and one presentation. The breakdown of the assignment is as follows:
Part Description Report Length Weight
Financial Statement Analysis and Presentation 2,000 words 40%
Financial Statement Presentation Presentation 10 min. 10%
Greenfingers, Plc. Investment Programme 2,000 words 50%
Part 1 – Financial Statement Analysis and Presentation
For Part 1 you will be calculating and evaluating the financial management of a company.
Select a publicly trading company. Download its most recent annual report(s), including financial statements for the past 2 years. You may select your own company or employer. Include the financial statements in the appendix of your business report.
Conduct a financial analysis by calculating a variety of profitability, liquidity, efficiency, and solvency ratios. Ratios should be calculated for a minimum of the past 2 years. Include the selected ratio calculations in the appendix of your business report.
Profitability Ratios Liquidity Ratios Efficiency Ratios Solvency Ratios
1. Gross Profit Margin Ratio 1. Current Ratio 1. Accounts Receivable 1. Debt Ratio
2. Operating Profit Margin 2. Quick Ratio
Turnover 2. Equity Ratio
Ratio 3. Cash Ratio 2. Accounts Payable 3. Debt to Equity Ratio
3. Net Profit Margin Ratio
Turnover 4. Interest Coverage Ratio
4. Return on Assets (ROA)
3. Asset Turnover Ratio
5. Return on Capital
4. Capital Turnover Ratio
Employed (ROCE)
5. Inventory Turnover Ratio
6. Return on Equity (ROE)
6. Working Capital Turnover
Ratio
Critically evaluate the calculated ratios and prepare a business report discussing your analysis. You should explain possible reasons for changes in ratios over the time period your selected. In addition, you should discuss the limitations of your ratio analysis.
Make several recommendations on how to improve the financial management of your selected company based on your ratio analysis.
Financial Statement Presentation
Create a presentation (audio or video) summarising the contents of your report. The maximum length should be 10 minutes.
Part 2 – Greenfingers, Plc. Investment Programme
For Part 2, you will evaluate three investment options and propose how an investment programme might be financed for Greenfingers, Plc.
Write a business report for Greenfingers’ Directors explaining whether the company should undertake the project or look for other opportunities. The business report should incorporate the following information:
An evaluation of the three investment options using the net present value (NPV) technique, assuming the cost of capital to be 6%. (You are required to show all of your calculations.). Identify which option you would recommend and provide a detailed explanation supporting your recommendation.
Based on your recommendation, calculate the approximate internal rate of return (IRR). (You arerequired to show all calculations).
Interpret your results including:
Include theoretical arguments for the choice of net present values and the best method for investment appraisal.
Explain the continued popularity among decision-makers of non-discounting methods of investment appraisal.
Identify what other factors should be considered before an investment decision is made.
If funds are limited to £2,500,000 and the projects are divisible, (i.e., it is possible to undertake a fraction of a total project), calculate the optimal investment policy and the resulting total NPV from your investment policy.
Provide your recommendations to the Greenfingers, Plc Directors how the proposed investment programme might be financed by identifying the main sources of available financing. Additionally, include the main advantages and disadvantages of each finance source.
Greenfingers, Plc. Scenario
Greenfingers Plc., who produce a variety of high-quality outdoor rattan furniture and associated items, is considering whether or not to invest to expand the business. The directors have identified three main options for a four-year plan:
Expand its flourishing retail outlet to include all products.
Launch an eCommerce site to generate internet sales.
Produce greenhouses and conservatories
These three options would require an initial expenditure of (A) £650,000, (B) £1,100,000, or (C) £1,800,000.
The most recent estimates on year-end cash flows is as follows:
Year 1 Year 2 Year 3 Year 4
£’000 £’000 £’000 £’000
(A) 300 400 450 500
(B) 500 550 700 950
(C) 500 800 1050 1200
Assume corporation tax is 25% and capital allowances are 25% on a straight-line basis. All of these cashflows occur in the year that they arise.