Reference no: EM1384573

Produce a report, based on a scenario, covering a range of learning outcomes. Demonstrate course concepts and ideas studied in the course. In addition, students ought to demonstrate their analytical skills, and communicate using management terms or language.

The report should typically include:
1. An executive summary
2. Table of contents
3. Main body of the report
4. Listing of references/bibliography

Module Learning Outcomes to be Assessed:-
• Understand the bases of financial markets.
• Appreciate the risks involved in financial management.
• Identify, analyse and solve financial problems confronting business enterprises, particularly problems relating to corporate investment, asset management and financing decisions.
• Analyse the impact of economic, legal and tax changes on the strategic and financial position of companies.
• Appreciate the ethical issues of financial management within business organisations.

Financial Management and Analysis

XX Chemicals is a medium sized company. The Directors of the company have been considering the possibility of running a project abroad. Forecasts statement of the company's financial position, using different exchange rate scenarios have been produced and presented to the management of XX Chemicals

Required:
Produce a report addressed to the Directors of XX Chemical, addressing the following requirements:

a) The Directors have been considering the possibility of raising the additional funds required for the project through rights issue. Critically examine the services that an investment bank could provide to XX Chemicals with the raising of additional finance.

b) Recently, an internally commissioned report has shown capital budget overspends, and the Board of XX Chemicals is considering changing the organisational structure of the firm and set up separate treasury and finance departments, hoping that separation of responsibilities will contribute to better capital budgeting and spending procedures in the future.

Examine critically the differing roles and responsibilities of the new treasury department and finance department in evaluating and implementing such a project abroad, and the interaction of the two departments throughout the process.

c) Discuss how inflation affects the rate of return required on the investment project, and the distinction between a real and a nominal (or‘money terms') approach to the evaluation of the investment project under inflation.