BFK450 Financial Analysis Coursework Portfolio
Do you need BFK450 Financial Analysis Coursework Portfolio Questions and Answers Help at a cost-effective rate? Assignmenthelpaus.com provides you with the Best Financial Statement Assignment Help in Australia by professional writers. Students can avail of our online free samples of all academic levels. Get BFK450 Financial Analysis Coursework Portfolio Assignment Services. If you have any query so, connect with our 24/7 online service. Place your order now!
Assignment Details:
- Words: 2500
Task 1: Financial Analysis
The Board of Directors has asked you to perform a review of the financial performance and financial position of the business based on the company’s 2033 financial statements and key financial ratios, and using any other available information which you consider to be relevant.
Required:
Prepare a report for the Board of Directors in which you analyse the company’s financial performance and financial position, and which specifically addresses the company’s profitability, efficiency, liquidity and stability.
You should provide an appendix to your report in which you provide full workings for the following 12 key financial ratios for your business for 2033:
- Return on capital employed
- Operating profit margin ratio
- Gross profit margin ratio
- Operating expenses to sales ratio
- Sales revenue on capital employed
- Inventory holding period
- Receivables days
- Payables days
- Current ratio
- Acid test ratio
- Gearing ratio
- Interest cover
You should incorporate 8 of the above key financial ratios within the body of your report including the following 3:
- Return on capital employed
- Gross profit margin ratio
- Gearing ratio
Note: Most members of the Board of Directors do not have a finance background so your report will need to include clear and appropriate explanations of the financial techniques and concepts which you have used in your analysis.
Word limit: 1,200 words excluding headings, sub-headings, tables, charts and appendices. Font Size: 12. Line Spacing: 1 ½.
Task 2: Evaluation of Product Recyclability Investment Opportunity
Your company’s Board of Directors is considering whether to launch a new recyclable model of robot in 2035 (‘Model 2’) and you have been asked to:
- evaluate the financial merits of this opportunity;
- to make a recommendation to management regarding whether this investment decision should be implemented; and
- to identify what other issues beyond your financial appraisal should be considered before a final decision is made.
The new model will require an investment in R&D of W$2m, all of which will be treated as Development costs. To produce the new model, capital expenditure of W$600,000 and 5 extra production employees will also be required.
The materials for this new model will cost W$100 per unit more than those for non- recyclable robots.
Following the results of a market research study which has already been carried out at a cost W$20,000, assuming your business maintains its retail sales price at the level set in 2034 there will be an increase in sales (compared with the level achieved in 2034) over the next five years as shown below:
Year 1 +200 units (compared with 2034)
Year 2 +250 units (compared with 2034)
Year 3 +300 units (compared with 2034)
Year 4 +350 units (compared with 2034)
Year 5 +400 units (compared with 2034)
Your company will need to carry out a technical feasibility study for the project at a cost of W$10,000. If the investment does go ahead then the production of the new model will require the use of factory space which could otherwise be sub-let for annual income of W$25,000. Also, it is estimated that the project will result in an increase in fixed overheads of W$15,000 per annum.
Your company usually evaluates investment opportunities over a 5-year timescale and applies the following decision criteria:
- Payback period within 5 years
- Positive net present value
Your business has in the past applied the following assumptions when evaluating capital investment projects:
- an allowance for general fixed costs of 8% of the extra revenue arising from the project be included in the analysis representing an allocation for general administration and overhead
- a cost of capital of 11% has been applied.
Task Details/Description:
Prepare a brief report for the Board of Directors which evaluates the financial merits of this investment opportunity. Your report should address the following detailed requirements:
- Perform a financial evaluation of this investment (A table highlighting the relevant cash flows together with detailed workings to support your net present value and payback calculations should be presented in an appendix).
- Using the table below, explain your reasoning for the treatment of the items specifically referred to in the narrative above as ‘relevant cash flows’ or (This table should be included in your main report and not in an appendix).
| Item | Relevant Cash
Flow? (Yes or No) |
Rationale for Treatment
as Relevant or Otherwise |
|
| 1 | Cost of R & D Project of W$2m | ||
| 2 | Amortisation of R&D Project
Costs |
||
| 3 | Capital expenditure of
W$600,000 |
||
| 4 | Depreciation of capital
expenditure |
||
| 5 | Cost of employing 5 extra
production staff |
||
| 6 | Cost of market research
study of W$20,000 |
||
| 7 | Cost of technical feasibility
study of W$10,000 |
||
| 8 | Factory rental income of
W$25,000 per annum |
||
| 9 | Increase in fixed overheads
of W$15,000 per annum |
||
| 10 | Allowance for general fixed
costs of 8% of revenue per annum |
- Identify and briefly explain two non-financial considerations which you believe should be taken into account before a final decision is
- Provide a clear recommendation to the Board as to whether this project should go ahead.
- Provide a list of any assumptions you have made in an appendix.
2030 Results
| STATEMENT OF PROFIT OR LOSS | STATEMENT OF FINANCIAL POSITION | ||||||||
| W$000 | W$000 | W$000 | W$000 | ||||||
| REVENUE | 5916 | NON CURRENT ASSETS: | |||||||
| Materials | -3402 | Property, plant & equipment | 2160 | ||||||
| Direct labour | -1155 | Development costs | 0 | ||||||
| COST OF SALES | -4557 | Investments | 0 | ||||||
| Total Non Current Assets | 2160 | ||||||||
| GROSS PROFIT | 1359 | ||||||||
| OPERATING EXPENSES: | CURRENT ASSETS: | ||||||||
| R & D | -300 | Inventory | 989 | ||||||
| Marketing | -110 | Receivables | 1459 | ||||||
| Administration | -278 | Prepayments | 0 | ||||||
| Overheads | -822 | Cash at bank | 0000 | ||||||
| Total Expenses | -1510 | Total Current Assets | 2448 | ||||||
| TOTAL ASSETS | 4608 | ||||||||
| OPERATING PROFIT | -151 | ||||||||
| Investment income | 0 | CURRENT LIABILITIES: | |||||||
| Interest receivable | 0 | Payables | 1163 | ||||||
| Interest payable | -182 | Bank overdraft | 78 | ||||||
| NET FINANCE COST | -182 | Accruals | 0 | ||||||
| Provisions | 0 | ||||||||
| PROFIT BEFORE TAX | -333 | Total Current Liabilities | 1241 | ||||||
| TAXATION | -0 | ||||||||
| NON CURRENT LIABILITIES | |||||||||
| PROFIT FOR THE YEAR | -333 | Long term loan | 1000 | ||||||
| Total Non Current | Liabilities | 1000 | |||||||
| TOTAL LIABILITIES | 2241 | ||||||||
| STATEMENT OF CASH FLOWS | NET ASSETS | 2367 | |||||||
| Operating profit | -0151 | ||||||||
| Add: Depreciation | +0240 | EQUITY: | |||||||
| Add: Amortisation | +0000 | Share capital | 120 | ||||||
| Change in working capital: | Share premium | 0 | |||||||
| 1. Inventory change | -0373 | Retained profits | 2247 | ||||||
| 2. Receivables change | +0241 | ||||||||
| 3. Prepayments change | +0000 | TOTAL EQUITY | 2367 | ||||||
| 4. Payables change | +0163 | ||||||||
| 5. Accruals change | +0000 | ||||||||
| 6. Provisions change | +0000 | PERFORMANCE INDICATORS | |||||||
| Total change in working | capital | +0031 | |||||||
| Cash generated from operations | +0120 | Staff | Morale | 6 | |||||
| Finance income received | +0000 | Staff | Skills | 5 | |||||
| Finance expenses paid | -0182 | Staff | Turnover | (%) | 8 | ||||
| Tax paid -0000 | Product Quality | 5 | |||||||
| Net cash flow from operations -0062 | Consumer Satisfaction | 5 | |||||||
| Retailer Satisfaction | 5 | ||||||||
| Less: Purchase of PP&E -0000 | Brand Awareness (%) | 10 | |||||||
| Less: Purchase of intangible assets -0 | |||||||||
| Less: Amount spent on investments -0000 | |||||||||
| Add: Investment income received | +0000 |
| Net cash flow from investing | +0000 |
| Proceeds from share issue | +0000 |
| Draw down (repayment) of loan | +1000 |
| Dividend paid | -0000 |
| Net cash flow from financing | +1000 |
| Net Cash Flow | +938 |
STATEMENT OF PROFIT OR LOSS STATEMENT OF FINANCIAL POSITION
|
REVENUE |
W$000 | W$000
9000 |
NON CURRENT ASSETS: |
W$000 | W$000 |
| Materials | -3896 | Property, plant & equipment | 2575 | ||
| Direct labour | -1438 | Development costs | 396 | ||
| COST OF SALES
GROSS PROFIT |
-5334
3666 |
Investments
Total Non Current Assets |
0 |
2971 |
|
| OPERATING EXPENSES: | CURRENT ASSETS: | ||||
| R & D | -240 | Inventory | 90 | ||
| Marketing | -160 | Receivables | 1479 | ||
| Administration | -310 | Prepayments | 0 | ||
| Overheads
Total Expenses |
-839 |
-1549 |
Cash at bank
Total Current Assets |
01486 |
3055 |
|
OPERATING PROFIT |
2117 |
TOTAL ASSETS | 6026 | ||
| Investment income | 0 | CURRENT LIABILITIES: | |||
| Interest receivable | 15 | Payables | 1645 | ||
| Interest payable | -80 | Bank overdraft | 0 | ||
| NET FINANCE COST | -65 | Accruals | 0 | ||
|
PROFIT BEFORE TAX |
2052 |
Provisions
Total Current Liabilities |
0 |
1645 |
|
| TAXATION | -530 |
NON CURRENT LIABILITIES |
|||
| PROFIT FOR THE YEAR | 1522 | Long term loan
Total Non Current Liabilities |
1000 |
1000 |
|
| TOTAL LIABILITIES | 2645 | ||||
| STATEMENT OF CASH FLOWS | NET ASSETS | 3381 | |||
| Operating profit | +2117 | EQUITY: | |||
| Add: Depreciation | +0175 | Share capital | 120 | ||
| Add: Amortisation | +0120 | Share premium | 0 | ||
| Change in working capital:
1. Inventory change |
-0090 |
Retained profits | 3261 | ||
| 2. Receivables change | +0420 | TOTAL EQUITY | 3381 | ||
| 3. Prepayments change | +0000 | ||||
| 4. Payables change | +0515 | ||||
| 5. Accruals change | +0000 | ||||
| 6. Provisions change | +0000 | PERFORMANCE INDICATORS | |||
| Total change in working capital | +0845 | ||||
| Cash generated from operations | +3257 | Staff Morale | 5 | ||
| Finance income received | +0015 | Staff Skills | 6 | ||
| Finance expenses paid | -0080 | Staff Turnover (%) | 13 | ||
| Tax paid | -0530 | Product Quality | 5 | ||
| Net cash flow from operations | +2662 | Consumer Satisfaction | 5 | ||
| Retailer Satisfaction | 7 | ||||
| Less: Purchase of PP&E | -1000 | Brand Awareness (%) | 10 | ||
| Less: Purchase of intangible assets | -0180 | ||||
| Less: Amount spent on investments | 0000 | ||||
| Add: Investment income received | +0000 | ||||
| Net cash flow from investing | -1180 | ||||
| Proceeds from share issue | +0000 | ||||
| Draw down (repayment) of loan | +0000 | ||||
| Dividend paid | -0304 | ||||
| Net cash flow from financing | -0304 | ||||
| Net Cash Flow | +1178 | ||||
KEY FINANCIAL RATIOS & METRICS SUPPLY AND DEMAND
| Share Price | (W$) | 22 | Sales Volume (units) | 1771 |
| Lost Sales (units) | 0 | |||
| Production (units) | 1801 | |||
| Total Capacity (units) | 1870 | |||
GROSS PROFIT PER UNIT ANALYSIS (W$)
Net sales price 5081
| Material cost | 2200 | |
| Direct labour | cost | 812 |
| Total cost | 3012 |
Gross profit 2069
MARKET SUMMARY
| Team 1 Team 2
Supply: Production (units) 1801 1600 |
Team 3 Team 4
1940 1790 |
Team 5
1801 |
|||||
| Closing Inventory (units) 284 439 | 763 0 | 30 | |||||
| Lost Sales (units) 0 0 | 0 1479 | 0 | |||||
| Salaries (W$000 p.p. p.a.) 12.0 10.8 | 10.0 10.5 | 11.0 | |||||
| Demand:
Price 7000 7500 |
7000 6750 |
6600 |
|||||
| Special Order Price 0 0 | 0 0 | 0 | |||||
| Market Share (%) 19.3 20.6 | 14.9 22.7 | 22.5 | |||||
| Sales Volume (units) 1517 1622 | 1177 1790 | 1771 | |||||
| Special Order Volume 0 0
N.B. Special Order contracts are excluded from |
the |
0 0
Sales numbers & Market |
0
Share calculations |
||||
| Financials (W$000): | |||||||
| Revenue | 8495 | 9002 | 6097 | 9304 | 9000 | ||
| Profit After | Tax | 748 | 948 | 985 | 877 | 1522 | |
| Net Assets | 3314 | 3908 | 3411 | 3904 | 3381 | ||
| Bank Overdraft | 619 | 1062 | |||||
For REF… Use: #getanswers2002085