LEVEL MODULE: ASSIGNMENT CODE: TUTOR: DUE DATE:

UNIVERSITY OF SUNDERLAND M ACCOUNTING & FINANCIAL MANAGEMENT PGBM12 Ashraf Elbakry Friday 11th January 2013

Assessment weight: 100% of module Outcomes Assessed: All module learning outcomes, knowledge and skills, are assessed in this assignment. This assessment is in four parts, please answer all elements. Please note that this is an individual assignment and the policy of the University on Policy on Cheating, Collusion and Plagiarism applies. Please write your Tutors name clearly on the front of the assignment.

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Part A (20%) Prospect Company is a wholesale distributor of professional equipment and supplies. The companys sales have averaged about 1,000,000 annually for the three-year period 20092011. The firms total assets at the end of 2011 amounted to 800,000. The president of Prospect has asked the controller to prepare a report that summarises the financial aspects of the companys operations for the past three years. The controller has presented a number of financial ratios that can assist in the identification and interpretation of trends. The following ratios for the three-year period have been calculated: Ratio Current ratio Acid-test ratio Accounts receivable turnover (times) Inventory turnover (times) Accounts payable days Percent of total debt to total assets Percent of long-term debt to total assets Sales to fixed assets Sales as a percent of 2009 sales Gross profit percentage Operating profit percentage Return on capital employed Return on equity Gearing Interest cover (times) Earnings per share Operating cash flow per share Required Write a report to the Board of Directors of Prospect Company to analyse the companys performance in relation to profitability; liquidity; asset utilisation and investors ratios. (20%) 2009 2.00 1.20 9.72 5.25 60 44% 25% 1.75 100% 40% 7.8% 8.5% 15% 40% 8 0.55 1.50 2010 2.13 1.10 8.57 4.80 75 41% 22% 1.88 103% 33.6% 7.8% 8.6% 14% 35% 10 0.80 1.85 2011 2.18 0.97 7.13 3.80 120 38% 19% 1.99 106% 38.5% 8% 8.7% 12% 30% 15 1.20 2.10

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Part B (20%) In each quarter of every year, the maximum capacity of Friends Co. factory is 3,600 hours available for sorting and re-packing two sorts of imported apples in special boxes where each box contains only one ton of either the red or the yellow apples. The monthly common committed fixed costs of the company are 100,000, and the following estimates are presented in relation to the coming quarter which will start 1st January 2013: Red apple 148 boxes 16,000 12.5 hours 4,000 Yellow apple 300 boxes 10,000 10 hours 4,800

Maximum demand in the local market Selling price per box Sorting and re-packing time required per box Contribution margin per box Required

(a) Do you consider the sorting and re-packing hours that are expected to be available in the 1st quarter of the coming year a scarce resource to Friend Co.? Explain your answer. (5%) (b) What is the optimal imports mix Friends Co should consider for the first quarter of 2013 in the light of the data available? (10%) (c) What is the relevance if any of the companys committed fixed costs to the decision of determining the optimal budget of imports? Discuss in details referring to the concept of relevant information for decision making purposes. (5%)

Part C (30%) Thomson Ltd., a food manufacturer, is considering purchasing a new machine for 300,000. The annual running costs are expected to be 20,000 plus straight line depreciation charge. The machine is expected to last for 4 years, after which the machine will be scrapped for an estimated amount of 20% of the original cost. The annual revenue is forecasted to be 80,000 and the cost of capital is 10 %. You are required to (a) Advise the management of Thomson Ltd whether or not it will be economically feasible to invest in the new machine in the light of the four different investment appraisal methods covered in this module. (15%) (b) Critically comment on the results you obtained in (a) above referring to the pros and cons of each evaluation method. (15%)

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Part D (30%) Explain and critically evaluate: (a) The main sources of finance available to business and the advantages and disadvantages of each source

(10%)

(b) The importance of budgets as a means of planning and controlling the various business activities as well as the advantages and disadvantages of budgets (10%) (c) The assumptions of the breakeven analysis in the light of the reality of todays business environments. (10%)

Notes: 1. To obtain a high mark, you should: a) Make your report concise, precise and well presented and structured; b) Draw logical conclusions from accounting information; c) Synthesise information in a coherent and useful way; d) Show evidence of key text and background reading; e) Incorporate your knowledge into an integrated piece of work; f) Demonstrate critical understanding of financial management. 2. A Harvard standard referencing is required for the report

Maximum 3,000 words overall (+/- 10%).

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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 and related to the assessment criteria for the module Categories Grade Relevance Knowledge Analysis Argument and Structure Critical Evaluation Presentation Reference to Literature 86 The work examined is exemplary and provides clear evidence of a complete grasp of the knowledge, understanding and skills appropriate to the Level of the qualification. There is also 100% ample excellent evidence showing that all the learning outcomes and responsibilities appropriate to that Level are fully satisfied. At this level it is expected that the work will be exemplary in all the categories cited above. It will demonstrate a particularly compelling evaluation, originality, and elegance of argument, interpretation or discourse. 76-85% The work examined is outstanding and demonstrates comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also excellent evidence showing that all the learning outcomes and responsibilities appropriate to that level are fully satisfied. At this level it is expected that the work will be outstanding in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse. The work examined is excellent and is evidence of comprehensive knowledge, understanding and skills appropriate to the Level of the qualification. There is also excellent evidence 70 75% showing that all the learning outcomes and responsibilities appropriate to that level are satisfied At this level it is expected that the work will be excellent in the majority of the categories cited above or by demonstrating particularly compelling evaluation and elegance of argument, interpretation or discourse. Directly relevant to A substantial Comprehensive Well supported, focussed Contains distinctive or Well written, with Critical appraisal of up-to60 69% the requirements of knowledge of analysis - clear and argument which is clear and independent thinking; standard spelling and date and/or appropriate the assessment relevant material, orderly logically structured. and begins to formulate grammar, in a literature. Recognition of showing a clear grasp presentation an independent position readable style with different perspectives. Very of themes, questions in relation to theory acceptable format good use of a wide range of and issues therein and/or practice. sophisticated source material. Some attempt to Adequate knowledge Significant Generally coherent and May contain some Competently written, Uses a good variety of 50 59% address the of a fair range of analytical logically structured, using an distinctive or with only minor literature which includes requirements of the relevant material, treatment which appropriate mode of independent thinking; lapses from standard recent texts and/or assessment: may with intermittent has a clear purpose argument and/or theoretical may begin to formulate grammar, with appropriate literature, drift away from this evidence of an mode(s) an independent position acceptable format including a substantive in less focused appreciation of its in relation to theory amount beyond library texts. passages significance and/or practice. Competent use of source material. 40 49% Some correlation Basic understanding Some analytical Some attempt to construct a Sound work which A simple basic style Evidence of use of with the of the subject but treatment, but may coherent argument, but may expresses a coherent but with significant appropriate literature which requirements of the addressing a limited be prone to suffer loss of focus and position only in broad deficiencies in goes beyond that referred to assessment but there range of material description, or to consistency, with issues at terms and in uncritical expression or format by the tutor. Frequently is a significant narrative, which stake stated only vaguely, or conformity to one or that may pose only uses a single source to degree of lacks clear theoretical mode(s) couched more standard views of obstacles for the support a point. Weak use of irrelevance analytical purpose in simplistic terms the topic reader quotation Pass Fa il 35 39% Relevance to the requirements of the A limited understanding of a Largely descriptive or narrative, with A basic argument is evident, but mainly supported by Some evidence of a view starting to be Numerous deficiencies in Barely adequate use of literature. Over reliance on

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assessment may be narrow range of little evidence of assertion and there may be a formed but mainly expression and material provided by the very intermittent, material analysis lack of clarity and coherence derivative. presentation; the tutor. and may be reduced writer may achieve to its vaguest and clarity (if at all) only least challenging by using a simplistic terms or repetitious style The evidence provided shows that the majority of the learning outcomes and responsibilities appropriate to that Level are satisfied. 30 34% The work examined provides insufficient evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence provided shows that some of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in some of the indicators. 15-29% The work examined is unacceptable and provides little evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence shows that few of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in several of the indicators. 0-14% The work examined is unacceptable and provides almost no evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence fails to show that any of the learning outcomes and responsibilities appropriate to that Level are satisfied. The work will be weak in the majority or all of the indicators. Ver 1.3 13/02/2008 SJS

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