Reference no: EM132276478

Learning outcomes:

1. Evaluate the performance of a company using various financial analytical tools.

2. Analyse different patterns of cost behaviour and apply cost-volume-profit analysis to business decisions.

3. Select and apply investment appraisal techniques appropriately.

4. Evaluate the performance of business units using both financial and non-financial measures.

Company - ACWA POWER

Q1. Assume that you are a Financial Analyst working of a leading Auditing Firm. Evaluate the financial performance of a company listed in the Muscat Securities Market (MSM)/GCC Market by taking into consideration the following instructions.

• Select a company listed in Muscat Securities Market/GCC Market (preferably other than banking and investment companies or Holding companies).
• Collect annual financial reports of the chosen company for three consecutive years.
• Use ONLY annual financial statements for analysis. Avoid using quarterly statements.
• Provide references for the data collected (use Coventry Harvard style of referencing). Company websites can also be used for data collection.
• From the financial statements and additional information collected by you complete the below mentioned tasks.

TASKS

A. Prepare comparative income statements and balance sheet for 3 years using Horizontal and Vertical Analysis techniques for the both income statements and balance sheet.

B. On the basis of literature review and from the above computations analyse; Profitability position and Financial position of the chosen company. Provide meaningful recommendations for the company to improve the Profitability position and financial position based on the analysis.

(Literature Review about the techniques used for analysis: 10 marks; analysis and recommendations:

Q2. City Cinemas is planning to expand and open new Cinemas in Sultanate of Oman. Currently they are considering two options, one is to start a new cinema in Sohar and other is to take over an existing cinema in Nizwa. But due to recent developments they will be able to fund only one project of the two as the overall revenue trends are subdued. Details of cash inflows for 5 years of the two projects along with additional information is given in the table below,

Details	New cinema at Sohar	Take-over existing cinema at Nizwa
Consumer trends	Growth expected at 10%	Stagnated
Population growth	12%	5%
Competition	Strong	Moderate
Initial cost	500,000	500,000
Cash flows
Year 1	150,000	200,000
Year 2	160,000	185,000
Year 3	190,000	160,000
Year 4	175,000	175,000
Year 5	200,000	150,000

A. Evaluate the projects using Internal Rate of Return method.

B. Based on the above analysis and on the basis of the relevant literature review, which project would you recommend and why. The students have to consider the non-financial factors provided in the above scenario and other relevant non-financial factors while recommending a project.

C. Based on appropriate literature review, analyse the non-financial factors provided in the above scenario and other relevant non-financial factors.

Q3. Your company, a leading fertilizer manufacturer has asked you to submit a cost-volume-profit analysis report for the two products being produced in your company.

Particulars	Product A Price per unit (RO)	Product B Price per unit (RO)
Sales price	20	15
Material	10	9
Direct wages	3	2
Variable expenses	100% of direct wages	100% of direct wages
Fixed expenses	RO 800

The following scenarios are predicted by the Management: Scenario 1: 100 units of product A and 200 units of product B Scenario 2: 150 units of product A and 150 units of product B Scenario 3: 200 units of product A and 100 units of product B

You are required to:

A. Compute the contribution per unit of both Product A and Product B. Find out total contribution and profits for each of the scenario.

B. In your opinion which is the most profitable scenario and justify your recommendation.

C. Evaluate the role of CVP analysis in taking business decisions with appropriate literature review.

Work proposal

a. Choose ONE COMPANY from the ‘Choice' lists given in Moodle in Week 5.
b. Make sure that all the data (financial statements are available for three consecutive years) will be available to you to do the analysis on the chosen company before you send your proposal.
c. There will be 10 marks for work proposal.
d. Word limit is a maximum of 300 words.