Explain and apply accounting techniques

Reference no: EM132505352 , Length: word count:3000

Learning Outcome 1: Explore how financial information is provided and in what form for management decision making.

Learning Outcome 2: Select, explain and apply accounting techniques to provide quantitative information for decision making

Learning Outcome 3: Critically assess information within the internal and external context of the required decision

Learning Outcome 4: Critically evaluate the role of financial information in the context of the whole organisation

Assessment brief - Case study

After several rounds of interview, you are successfully appointed as the CFO of the Company. The Company has enjoyed considerable success in recent years and the board of directors have decided to adopt a growth strategy by making further investment in their current production line and acquiring an existing company in their industry. As the newly appointed CFO of the Company, you are tasked to evaluate the performance of the Company and prepare a report to the board of directors with evaluation of the potential investment opportunities.

The first investment under consideration is to make further investment in their current product, which needs initial investment between £40,000,000 and £50,000,000 and has a life of 10 years. The finance department appraised some other similar investments before using different investment appraisal techniques.

At the same time, the Company plans to acquire another company in the same industry in the near future. However, the board of directors require more information for the potential target. You are tasked with the responsibility of identifying a potential target company and preparing a report to the board of directors justifying the choice of a target company and potential implications from mergers and acquisitions.

Required:

Suppose you are successfully appointed as the CFO for ONE of the listed companies below.
• The Berkeley Group Holdings plc
• InterContinental Hotels Group
• Marks & Spencer Group plc
• GlaxoSmithKline
• Burberry Group PLC
• Aviva
As the newly appointed CFO of your chosen company, you are required to write a report to the senior management team - fully referenced, and address the following

1. Evaluate financial performance: Choose FOUR categories from the list of five categories of financial ratios below and use ONE financial ratio from each category to assess the financial health of your chosen company using past 5-year financial information:
I. Profitability
2. Efficiency
3. Liquidity
4. Financial gearing
5. Investment

Note: Analyse your chosen financial ratios using information from financial statements. Considering word limit, please choose ONE financial ratio from FOUR different categories listed above; therefore, you should focus on four ratios in total in this part of analysis. Critical analysis of the four ratios under four categories is required for a good work. Please critically evaluate past five-year firm performance, i.e., 2015-2019, using your chosen ratios and discuss the problems and limitations of financial ratios as a tool of financial analysis before make recommendation to the board of directors. Create your own small tables, diagrams and charts in your analysis and present professionally. Financial ratios can be collected using Osiris and Fame through ARU library annual reports or other professional resources. Compare with competitors and industry will be helpful. Suggested word: 750-850 words.

2. Investment appraisal: You plan to use NPV and IRR techniques to evaluate the project. Critically discuss NPV and IRR techniques and the implications of the investment on the Company. Risk and uncertainty in investment appraisal should be considered before you make recommendation. The discount rate is 12% for the Company (Ignore inflation and taxation).

3. Potential acquisition: After you identify a potential target company, you will address the following in your report to the senior management team:
1. Rationale for choosing the target company
2. The synergistic gain of the acquisition for the Company
3. Proposed deal value and finance of the acquisition
4. The potential implications of such acquisition on firm performance
5. Challenges and risk assessment of the acquisition

Reference no: EM132505352

Questions Cloud

Calculating current net income and net income : Check your answer by calculating current net income and net income with a 20% increase. PinPoint's EBIT is this year is $20,000. They paid $16,000 in interest

Record the sale of the cake on may : The cake cost a total of $15,000. Stephanie is going to pay the balance owed in June 2019. Record the sale of the cake on May 31st.

Draw a table representing sequential game : Two firms are in the chocolate market. Each can choose to go for the high end of the market (high quality) or the low end (low quality).

Record wages for the last day of may that have not been paid : Sunny pays every week on Friday. May 31st was a Wednesday. Record the wages for the last days of May that have not been paid.

Explain and apply accounting techniques : Explore how financial information is provided and in what form for management decision making and explain and apply accounting techniques

Calculate the new monetary base : A. If the required reserve ratio is 15 percent, currency in circulation is $400 billion, checkable deposits are $1000 billion, and excess reserves total $1 bill

Calculate and record the interest owes for the months : Calculate and record the interest that she owes for the months of January through May. She will not pay it until December 31st, 2020.

Preservation of market power depend : Upon what does the preservation of market power depend?

Record the baking equipment depreciation for month of may : Record the baking equipment depreciation for the month of May only. The depreciation for January through April has already been recorded.

User Account

All Pages