PGBM01 – Financial Management and Control (Academic Assignment)

Module leader:
Workshop Tutor:
Assessment weight: 100% of the module
Outcomes Assessed: All
This assessment is in three parts, please answer all elements.
Please note that this is an individual assignment and the universities “Policy on Cheating, Collusion and Plagiarism” applies. All calculations and tables are subject to plagiarism policy of the University. All tables and calculations should be your own work.
Please write your Tutor’s name clearly on the front of the assignment.
This assessment covers the following learning outcomes from the module.
Knowledge:

K1. A critical understanding of the key strategic financial statements of an organisation
K2. Understanding and evaluation of the uses of both quantitative and qualitative
accounting information within an organisation
K3. Knowledge and understanding of theoretical concepts and frameworks to a range of
practical situations in order to propose solutions to strategic business problems
Skills
S1. The cognitive skills of critical thinking and analysis in showing how the finance function
can make a significant contribution to the successful strategic management of an
organisation
S2. The skills necessary to communicate effectively at a senior level and be able to put these
skills into practice
S3. Development of the skills required to independently access and process financial data
Canvas Turnitin Submission Deadline: DD/MM/YYYY by 2pm

Part A
Question 1: KADLex PLC
KADLex PLC is well established Financial Consultancy company in London. The board of directors have investigated the financial statements of the last two years and have noticed significant changes in different elements of Income statements and Balance sheets. You are working in the same company as a junior management accountant and directors have asked you to prepare a report on results of the two year’s financial statements. The financial statement of the KADLex PLC are given below:

Required:

1. 1. Prepare a structured report for Board of KADLex PLC Plc, which evaluates the
   performance of the company in relation to relevant ratios of the profitability, liquidity,
   gearing, asset utilisation, investors’ potential. Your report must be supported by the
   calculations of relevant ratios in the five areas mentioned above. (20%)
2. Easy-Life Limited, a London based Event Organiser is as a strategic business unit of
   KADLex PLC. Sales revenue and direct costs for one event is £1000 and £600
   respectively. Total fixed costs for the year ending December 2020 was £160,000.
   Calculate breakeven in both sales (unit and cash), contribution margin ratio, and
   operating leverage (assuming actual sales quantity of 700 unit was increased by 10%).
   Critically discuss how each of these three metrics can be used to impact on any of the profitability ratios in Task 1 above. (10%)
   Total marks for Part A: (30)
   All calculations should be clearly shown including all appropriate workings and should be made to the nearest £000 or two decimal places where required.
   Part B
   Perri-perri Sauce (PPS)Ltd, is well established London based fast-food company. The
   directors are expecting that demand of meal in future will increase significantly and with current capacity company will not be able to meet the demand. Therefore, directors have decided to purchase a new machine to enhance the capacity to benefit from the expected increase in demand. Two versions of machines are available from different manufacturers at the same cost of £600,000. Both machines have six years useful life and will be sold at estimated price of £60,000 at the end of sixth year. PPS Ltd will use straight line method for depreciation of these machines. Cost of capital for both machines is 8%.
   Directors are to purchase one machine from the available two, same cost and net cash inflow from both machines is confusing them to take decision. You are Finance Manager of PPS Ltd and directors have asked to produce a report which should highlight the economic feasibility for decision making. Further information regarding net cash inflow from both machines is provided below:
   

1. 
   Requirements:
   Required:
2. Calculate (2-decimal places) using the following investment appraisal techniques, and
   provide recommendations as to the economic feasibility of acquiring the suitable
   machine:
   a. The Payback Period.
   b. The Discounted Payback Period.
   c. The Accounting Rate of Return.
   d. The Net Present Value.
   e. The Internal Rate of Return (to two decimal places)
   Marks (15%)
3. Critically evaluate the key benefits and limitations of each of the differing investment
   appraisal techniques, supporting the response with relevant academic research as to whether each of the differing techniques is applied in practice within a real-life business context.
   Marks (20%)
4. You are also required to critically evaluate three suitable sources of finance to fund
   PPS Ltd in this investment as compared to a listed company. Marks (15%)
   Total marks for Part B – (50)
   Part C: Budgeting:
   Required:
5. Critically evaluate the budgeting process and demonstrate how budgets, objectives,
   and strategic plans are related. Research and use a multinational organisation of
   your choice as an example in your answer. You may also collaborate this task
   through Canvas (20%)
   Total marks for Part C: (20)
   Notes:
6. 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
7. A Harvard standard referencing is required for the report
   Limit overall words 3,500 (+- 10%)
   All calculations should demonstrate the appropriate workings that are used to derive
   the solution, and should not be performed in Microsoft Excel.