Evaluate the Financial Performance of an Organisation - Accounting and Finance Assignment Help

Assignment Task:

Task:

Learning outcomes and pass attainment level:
 Evaluate the financial performance of an organisation using financial and narrative information prepared under International GAAP
 Apply appropriate costing and budgeting techniques to a specific scenario.
 Evaluate alternate investment projects using appropriate techniques.
 Evaluate alternative methods of corporate financing on financial performance.
 Demonstrate a level of competence in the preparation and analysis of financial information.

General guidance
The assessment for this unit is one coursework assignment. The required mark has been set at 50%. If you are attempting a first or second re-sit attempt your pass mark will be capped at 50%.
This is an individual assessment. Whilst there is no objection to you discussing the content of this assignment with your peers, your final submission must be completely your own work. Plagiarism and copying will not be tolerated and may lead to subsequent penalties being imposed. This is an individual assignment and all calculations, analysis and narrative submitted must be your own work.
The assignment will require a considerable personal investment of time and effort.

Structure of the assignment

There are four separate questions included within the assignment and you should attempt all four questions. There is no word limit to questions. If any part of the assignment is ignored this reduces the maximum marks which could potentially be awarded. The assignment answer should be carefully checked before submission for the use of appropriate and acceptable grammar. The correct use of English spelling is to be employed throughout. All the numbers should be reported in 2 decimal points.

Submission of the assignment
All four questions must be attempted and submitted in one document. You are advised to prepare your assignment in Word format and copy and paste contents from Excel where spreadsheets have been used to support your work. Only Microsoft Word file will be allowed for submission.

Your student ID number should be shown on each page of your assignment. Your assignment should be submitted electronically via Moodle and you are advised to do this well in advance of the submission deadline to avoid any system related issues. Feedback on your assignment will also be provided via Moodle once the marking has been completed.

Marking of the assignment
The matrix on the following page has been provided to assist you in completing your assignment and is an indicative guide only, not a formal marking scheme.

Requirements

1.1 Prepare a business report, maximum 2 pages long (+/- 10%), to the board of directors of Alphabet Holdings Plc using ratio analysis. Your 400-word report must evaluate the financial statements and ratio analysis and make a convincing argument for investment in one of the two target companies. Your analysis, conclusions and recommendations should be supported with academic references.
(400 words, 30 marks)
1.2 Critically evaluate the working capital management (WCM) of both companies and draw conclusions on which is stronger. (200 words, 5 marks)
1.3 What sources of finance should Alphabet Holdings Plc consider to finance the investment in either ABC Ltd or XYZ Ltd? Critically evaluate the options you have identified and make a well-reasoned, and well-referenced, conclusion and recommendation. (200 words, 5 marks)

Question 2
You work for Alphabet Holdings Plc as a junior management accountant.
The board of directors are considering ways to improve the suboptimal performance of an investment in a manufacturing company called DEF products Ltd.
As you can see from the table below the directors are considering closing products Bozon and Carbon in an effort to improve overall profitability.
You spot that marginal costing would show the results differently and may affect the directors’ decision.

AxorBozonCarbonTotal
(£m)(£m)(£m)(£m)
7,9205,2803,78016,980

Materials(2,520)(1,680)(1,680)(5,880)
Labour(2,520)(2,520)(2,520)(7,560)
Overheads(1,260)(1,260)(1,260)(3,780)
1,620(180)(1,680)(240)

Sales Cost of sales

Profit/(loss)
Requirements for Question 2
i. Use your knowledge of management accounting and marginal costing to calculate the contribution of each product 5 marks
ii. Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Bozon 2 marks
iii. Use your findings from part (a) and appropriate academic references to explain whether the company should stop making product Carbon 2 marks
iv. Discuss how and why marginal costing calculates contribution to pay overheads and why this is useful in evaluating product value to a firm? 3 marks
v. Do you agree that profitability will improve by ceasing to make Products Bozon and Carbon? What do you suggest the company does to increase profitability?

3 marks

Question 3
As an Alphabet Holdings Plc junior management accountant, the Finance Director wants your calculations and recommendation regarding an expansion plan the Board is considering, which includes a chain of factory outlet stores.

Below are the figures for the first one that is planned for a central Birmingham location next year. Company policy dictates that any decision should be based on the results of calculating Net Present Value (NPV) of 3 years of cash flows using a cost of capital of 12%, Payback Period (PBP) must be less than 3 years, and the Internal Rate of Return (IRR) of the project should provide a 5% cushion in case of increases in inflation or interest rates.

The investment consists of £100,000 for the land, building costs of £158,000, and £36,600 for fittings and equipment.
The cash flows in year 1 are expected to be: total sales revenue £600,600; the cost of Axor products sold
£165,900; Bozon stock sold £118,860; staff costs £24,780; light & heat £35,196; other overheads
£134,904. The cash flows for years 2 and 3 are the same, but are expected to increase by 2% inflation each year.

Requirements for Question 3
Using the information above and in accord with the above stated company policy you are required to calculate:
i. Net Present Value (NPV) 5 marks
ii. Payback period (PBP) and Discounted Payback Period (DPBP) 5 marks
iii. Internal Rate of Return 1 marks
iv. Based on your calculations do you recommend the investment is made and the new outlet store is built? 2 marks
v. Critically discuss the limitations of the above project appraisal techniques used and any other recommendations to the board.

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