Managing Financial Principles and Techniques
Company - Tsui Wah
Assignment Brief
As part of the formal assessment for the Diploma in Strategic Management and Leadership programme you are required to submit an assignment for each module. Please refer to your Student Handbook for full details of the programme assessment scheme and general information on preparing and submitting assignments.
After completing the module you should be able to:
LO1 Be able to apply cost concepts to the decision-making process
LO2 Be able to apply forecasting techniques to obtain information for decision making
LO3 Be able to participate in the budgetary process of an organisation
LO4 Be able to recommend cost reduction and management processes for an organisation
LO5 Be able to use financial appraisal techniques to make strategic investment decisions for an organisation
LO6 Be able to interpret financial statements for planning and decision making
Assignment Task
Task 1
You should choose a good or a service, which is generated by an organisation in Hong Kong with which you are familiar. You should then
a) Discuss different means of categorising costs and identify how such categories can be applied (or not) to the different costs incurred in the production of your chosen good or service.
b) On the basis of your discussion above design a system to measure and record the costs involved in producing that good or service.
c) With reference to relevant theory and concepts, explain the role that costs may play in an organisation's pricing decision. Propose improvements to the costing and pricing systems used by an organisation with which you are familiar.
d) With reference to relevant theory and concepts recommend processes that could assist you chosen organisation reduce some costs.
e) Evaluate how far Activity Based Costing might be an appropriate means of identifying the full cost of the good or service considered above.
Task 2
This question concerns a fictional company called Gablehead. They are a kitchen equipment manufacturing company who have recently expanded quite significantly. You work for them as an accountant and have prepared the following sales revenue figures for the last 9 months.
You are required to
a) Moving averages can be used to forecast future performance. Explain what is meant by the term moving average and calculate a three month moving average for the sales figures above. Use that calculation as the basis of forecasting sales revenue for the next two months i.e. January and February. Explain the methodology you have used, making particular references to any assumptions you have made within that methodology.
b) Discuss what can be considered to be good practice in both the construction of a master budget by a large organisation and budgetary monitoring and control.
c) You should provide some budgeted target figures and corresponding actual figures. Identify the variances between these two sets of figures, discuss how significant you think the variances might be considered to be and their possible causes.
d) Evaluate how far the use of budgets by organisations to monitor and control financial performance conforms to the good practice in budgetary monitoring and control you discussed in the previous question.
Task 3
A company with $20,000,000 to invest is considering two possible investment projects. Below we set out the anticipated cash flows for each project.
|
Year
|
Project A ($000)
|
Project B ($000)
|
|
0
|
(20,000)
|
(20,000)
|
|
1
|
1,090
|
1,020
|
|
2
|
2,600
|
2,700
|
|
3
|
9,090
|
5,600
|
|
4
|
7,980
|
11,590
|
|
5
|
8,470
|
6,470
|
Other relevant information is
- the company discounts its investment projects using a 4% discount rate
- the company depreciates its capital assets on a straight-line basis; for the above project you should assume that the equipment has no scrap value at the end of the 5 year period.
a) For each of the above projects you are required to calculate their
- NPV
- payback
- accounting rate of return
b) Describe one other investment appraisal technique the company might have used and discuss why.
c) Discuss the strengths and weaknesses of each of the investment appraisal techniques above.
d) Based upon the calculations in a), recommend which project the company should adopt if any. Give reasons for your decision.
e) Discuss how a post-appraisal audit may help one improve on the effectiveness of investment decision making.
f) Identify three possible sources of finance available to the company for this investment and discuss the advantages and disadvantages of each source.
Task 4
a) Based upon the published financial accounts of a company in Hong Kong of your choice, assess the profitability of the company over the last two financial years.
b) Discuss how the organization might respond to your discussion in a) and if necessary, improve its profitability.
Attachment:- assignment brief.rar