Financial Management and Control Assignment Question Help-Masters’ Level
LEVEL MASTERS
MODULE: FINANCIAL MANAGEMENT & CONTROL
ASSIGNMENT CODE PGBM01 Part A– Greatness Plc
You are a financial analyst at Greatness Plc; a public limited company specialising in manufacturing and distributing office equipment. The Board of Directors have looked into the financial statements of the company for the last two years and have raised a concern about the company’s profitability and liquidity. The financial statements of Greatness for the last two years are given below:
Income statement for the year ended 31 December
| 2017 | 2016 | |||
| £000 | £000 | £000 | £000 | |
| Revenue | 17,300 | 16,100 | ||
| Cost of sales: | ||||
| Opening inventory | 900 | 750 | ||
| Manufacturing costs | 9,150 | 8,100 | ||
| Closing inventory | 1,025 | 900 | ||
| 9,025 | 7,950 | |||
| Gross profit | 8,275 | 8,150 | ||
| Selling and distribution expenses | 3,200 | 2,975 | ||
| Administrative expenses | 1,975 | 1,320 | ||
| Bad debts written off | 690 | 520 | ||
| 5,865 | 4,815 | |||
| Operating profit before interest and tax | 2,410 | 3,335 | ||
| Interest payable | 750 | 560 | ||
| Profit before tax | 1,660 | 2,775 | ||
| Income tax | 330 | 555 | ||
| Profit after tax | 1,330 | 2,220 | ||
| Dividends paid | 190 | 170 | ||
| Retained profit for the year | 1,140 | 2,050 | ||
Statement of Financial Position as at 31 December
| 2017 | 2016 | |||
| £000 | £000 | £000 | £000 | |
| Property, plant and equipment (net) | ||||
| Land and building | 6,890 | 5,570 | ||
| Equipment | 1,450 | 1,145 | ||
| Motor vehicles | 1,075 | 890 | ||
| 9,415 | 7,605 | |||
| Current assets | ||||
| Cash | -0- | 460 | ||
| Inventory | 1,025 | 900 | ||
| Trade receivables | 3,750 | 2,495 | ||
| Current liabilities | ||||
| Trade payables | 2,150 | 2,070 | ||
| Other payables (including taxation) | 515 | 840 | ||
| Bank overdraft | 285 | -0- | ||
| Net current assets | 1,825 | 945 | ||
| 11,240 | 8,550 | |||
| Non-current liabilities | ||||
| Loan capital | 4,450 | 4,075 | ||
| 6,790 | 4,475 | |||
| Equity | ||||
| Ordinary shares of £1 each | 2,800 | 1,625 | ||
| Retained profit | 3,990 | 2,850 | ||
| 6,790 | 4,475 | |||
Required:
- Provide relevant ratio calculations for both 2017 and 2016 within the following performance areas:-
- (Including the WCC calculation)
- Efficiency / Asset Utilization.
(20%)
All calculations should be clearly shown including workings and should be made to two decimal places.
- Write a report to the Board of Greatness Plc. that provides relevant analysis and evaluation of the company performance based upon the calculations offered within the previous section. (20%)
Total for Part A (40%)
Part B – Quick Freezed Ltd
Quick freezed Ltd is specialized in producing and selling fridge freezers. In 2017, the manufacturing cost per unit included:
| £ | |
| Direct material | 300 |
| Direct labor (45 minutes per unit) | 80/hour |
| Variable manufacturing overhead | 50 |
| Variable selling expenses | 60 |
| Variable administrative expenses | 35 |
Fixed costs for the year ended 31 December 2017 were:
| £000 | |
| Fixed manufacturing | 2,750 |
| Fixed selling and distribution | 1,600 |
| Fixed administrative | 1,050 |
The company produced and sold 30,000 units at £850 per unit.
In 2018, management has decided to increase the selling price by 20% and to maintain the same contribution margin ratio as last year. This increase in price is to meet an increase of £1,200,000 in fixed costs in 2018. The company has produced and sold the same quantity in 2018 as last year.
Required:
- Calculate the break-even point and margin of safety in both units and revenue for the two years, 2017 and 2018, and briefly comment upon the results. (15%)
- Analyze and critically evaluate the key assumptions attached to the breakeven model,within the light of the reality of today’s business environments. (15%)
Total for part B (30%)
Part C
Explain and critically evaluate:
- The main sources of finance available to business and their associated costs. Ensure you evaluate the appropriateness of how the chosen sources increase the leverage (gearing) of a business. (15%)
- The use of budgets as a means of planning and controlling the various business activities. (15%)
Total for part C (30%)
Notes:
- To obtain a high mark, you should:
- Make your report concise, precise, well presented and structured;
- Draw logical conclusions from accounting information;
- Synthesise information in a coherent and useful way;
- Show evidence of key text and background reading;
- Incorporate your knowledge into an integrated piece of work;
- Demonstrate critical understanding of financial management.
- A Harvard standard reference is required for the report
Maximum 3,500 words overall (+/- 10%)
Students are required to submit their coursework through JIRA. Only assessments submitted through JIRA will be marked. Any other submission including submission to your study centre in hard copy will be treated as a non-submission.
If your centre supports Turnitin©, a copy of your Turnitin© originality report must be submitted in conjunction with your assignment.
ASSESSMENT CRITERIA AT THE LEVEL OF THE TARGET AWARD APPENDIX 4
Generic Assessment Criteria – Postgraduate
These should be interpreted according to the level at which you are working
AQH-F6-15 Guidelines on Generic Assessment Criteria, v3
