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Assignment of finance and accounting
Paper , Order, or Assignment Requirements

Question 1

The following financial data is for two Oil and Gas companies that are listed on the London Stock Exchange.

BP Plc (Global Business Browser)
BP plc

Annual Ratios

[GBP Thousands]

31-Dec-2015 31-Dec-2014 31-Dec-2013 31-Dec-2012 31-Dec-2011

Financial Strength

Current Ratio 1.29 1.37 1.33 1.44 1.17

Quick/Acid Test Ratio 0.91 0.98 0.87 0.76 0.70

Working Capital (1) 10,709,130 15,185,394 14,543,913 21,177,453 9,139,695

Long Term Debt/Equity 0.48 0.41 0.32 0.33 0.32

Total Debt/Equity 0.55 0.47 0.37 0.41 0.40

Long Term Debt/Total Capital 0.31 0.28 0.23 0.23 0.23

Total Debt/Total Capital 0.35 0.32 0.27 0.29 0.28

Pay-out Ratio -113.03% 192.21% 29.47% 57.00% 21.00%

Effective Tax Rate – 19.13% 21.39% 37.95% 33.01%

Total Capital 101,428,513 105,505,323 107,435,385 103,206,116 100,235,506

Efficiency

Asset Turnover 0.82 1.20 1.25 1.27 1.33

Inventory Turnover 12.48 13.12 11.59 12.34 12.15

Days In Inventory 29.25 27.82 31.48 29.58 30.05

Receivables Turnover 8.05 9.72 9.61 9.12 9.21

Days Receivables Outstanding 45.36 37.56 37.97 40.01 39.62

Revenue/Employee 1,883,883 2,686,991 2,735,248 2,692,377 2,898,753

Operating Income/Employee -93,022 6,627 102,654 50,965 225,627

EBITDA/Employee 35,608 144,880 200,121 141,868 313,250

Profitability

Gross Margin 8.99% 11.69% 12.19% 10.89% 15.47%

Operating Margin -4.94% 0.25% 3.75% 1.89% 7.78%

EBITDA Margin 1.89% 5.39% 7.32% 5.27% 10.81%

EBIT Margin -4.94% 0.25% 3.75% 1.89% 7.78%

Pre-tax Margin -4.29% 1.40% 7.97% 4.83% 10.17%

Net Profit Margin -2.91% 1.07% 6.18% 2.93% 6.71%

R&D Expense/Revenue 1.06% 1.03% 0.91% 0.39% 0.40%

COGS/Revenue 91.01% 88.31% 87.81% 89.11% 84.53%

SG&A Expense/Revenue 5.18% 3.59% 3.45% 3.55% 3.72%

Management Effectiveness

Return on Assets -2.34% 1.36% 7.84% 3.79% 9.06%

Return on Equity -6.22% 3.14% 18.92% 9.57% 24.41%

Valuation

Free Cash Flow/Share 0.02 0.36 -0.11 -0.09 0.14

Operating Cash Flow/Share 0.70 1.15 0.69 0.66 0.75

Royal Dutch Shell Plc (Global Business Browser)
Royal Dutch Shell Plc

Annual Ratios

[GBP Thousands]

31-Dec-2015 31-Dec-2014 31-Dec-2013 31-Dec-2012 31-Dec-2011

Financial Strength

Current Ratio 1.32 1.16 1.11 1.18 1.17

Quick/Acid Test Ratio 0.91 0.72 0.64 0.74 0.88

Working Capital 15,114,726 8,711,678 6,104,352 10,991,426 11,014,735

Long Term Debt/Equity 0.32 0.22 0.20 0.17 0.19

Total Debt/Equity 0.36 0.26 0.25 0.22 0.23

Long Term Debt/Total Capital 0.24 0.18 0.16 0.14 0.16

Total Debt/Total Capital 0.26 0.21 0.20 0.18 0.19

Payout Ratio 612.78% 79.77% 69.17% 40.32% 33.86%

Effective Tax Rate -7.47% 47.98% 50.80% 46.63% 44.02%

Total Capital 149,228,413 139,675,832 135,953,634 131,552,295 125,896,017

Efficiency

Asset Turnover 0.76 1.19 1.28 1.36 1.42

Inventory Turnover 12.54 14.38 12.55 13.25 13.60

Days In Inventory 29.11 25.39 29.07 27.54 26.84

Receivables Turnover 7.24 9.27 8.75 7.06 7.45

Days Receivables Outstanding 50.42 39.39 41.71 51.68 48.99

Revenue/Employee – 2,876,819 2,968,784 3,324,094 3,361,510

Operating Income/Employee – 135,887 177,324 269,583 304,514

EBITDA/Employee – 303,255 318,837 373,578 399,088

Profitability

Gross Margin 15.93% 15.15% 15.44% 15.24% 15.65%

Operating Margin -1.23% 4.72% 5.97% 8.11% 9.06%

EBITDA Margin 8.85% 10.54% 10.74% 11.24% 11.87%

EBIT Margin -1.23% 4.72% 5.97% 8.11% 9.06%

Pretax Margin 0.77% 6.72% 7.44% 10.81% 11.81%

Net Profit Margin 0.73% 3.53% 3.63% 5.72% 6.56%

R&D Expense/Revenue 2.57% 1.29% 1.46% 0.94% 0.72%

COGS/Revenue 84.07% 84.85% 84.56% 84.76% 84.35%

SG&A Expense/Revenue 4.51% 3.32% 3.25% 3.10% 3.05%

Management Effectiveness

Return on Assets 0.63% 4.15% 4.67% 7.84% 9.42%

Return on Equity 1.16% 8.45% 9.23% 16.03% 20.12%

Valuation

Free Cash Flow/Share 0.39 1.35 0.03 1.31 1.06

Operating Cash Flow/Share 3.14 4.60 3.89 4.47 3.74

You are required to:

(a) Select and justify at least 10 financial ratios and calculate 2 non-financial ratios to analyse the performance and financial position of the two companies.

You are expected to use charts to compare performance of the two companies. You will need to look at the audited financial statement and carry out further research to explain the performance of the company over the five years.

For clarity, you are expected to rank the companies based on the individual benchmarks and overall. (50 Marks)

(b) Write a memo to the managing director of the number two (poor performing) company with recommendations of how the financial performance of the business can be improved. (15 marks)

(c) Outline the limitations of relying on financial ratios to interpret firm performance? (5 Marks)

(Total 70 Marks)

You are expected to research for more information on the companies and cite the material correctly. You can use the Global Business Browser database to access analysts’ and SWOT reports.

Question 2: Advanced: Discussion of alternative investment appraisal techniques and the calculation of payback and Net Present value for two mutually exclusive projects.

Peer Ltd has the opportunity to become involved in one of two potential and mutually exclusive (but not both) projects. Each project will involve the purchase of machines.

The following data relates to the two projects:

Project PE3 ER5

£ £

Initial Cost 205,000 150,000

Profits: Year 1 35,000 30,000

Year 2 50,000 25,000

Year 3 10,000 – 50,000

Year 4 10,000 10,000

Year 5 50,000 3,000

Year 6 2,000

Additional Information:

All cash flows take place at the end of the year apart from the original investment in the project which takes place at the beginning of the project.
Project PE3 machinery is to be disposed of at the end of year 5 with a scrap value of £5,000.
Project ER5 machinery is to be disposed of at the end of the year 3 with a nil scrap value and replace with new project machinery that will cost £100,000.
The cost of this additional machinery has been deducted in arriving at the profit projections for ER5 for year 3. It is projected that it will last for three years and have a Nil scrap value.
The company’s policy is to depreciate its assets on a straight line basis.
The discount rate to be used by the company is 10%.

Required:

Using appropriate investment appraisal techniques advise senior management whether they should opt for project PE3 or Project ER5.
(20 marks)

Discuss the limitations of using investment appraisal technique to aid long term decision making.
(10 marks)

(Total 30 marks)

ADDITIONAL GUIDANCE

All calculations must be detailed and presented clearly.
Use of published work (citing references) within text is expected.
A full list of references should be presented at the end of the case study.
Please avoid the use of ‘I, We, Us’ in your case study. You are expected to write in third person.
Include the assignment front sheet and marking scheme which is attached to the assignment brief.
Your answer should not repeat the question as it will be included in your word count.
Formatting:
Font Type: Arial.
Font size 11/12.
Line spacing 1.5 to 2.
All pages must be numbered
All graphs, charts and tables should have a number and a title.
All text must be aligned to the left.
Good use of English, referencing, presentation will earn marks.
Submit online and on time, late submissions will not be accepted.
For extensions or deferral of assessment, please refer to the University policy on mitigating circumstances.

Accounting and Finance Penalties

Word Count*: All assessments have a word count with a tolerance of 10% only. Submissions that exceed the word count will be penalised as follows-one grade point* for every 150 words or part thereof.
Missing References – penalty is three grade points minimum (see module guide for further details).
Front sheet missing-penalty one grade point.
Word count missing or inaccurate-penalty one grade point.
** Front sheet, contents page, references and any appendices do not count in the word count.

Corporate Accounting
Paper , Order, or Assignment Requirements

Tasks involved
1. Choose the latest annual report for any one of the following companies
Your group shall be allocated latest annual report (2015) of one of the following companies listed on the Australian Stock Exchange. Your group is required to answer following assignment questions for the company selected in a report format and also compare the findings of your company ( wherever necessary) with another competing company from the same industry selected by your assignment group ( Preferably from ASX 200 companies available at http://www.asx200list.com/ )

AGL Energy Limited (Utilities)
Newcrest Mining Limited (Materials)
Qantas Airways Limited (Industrials)
Ramsay Health Care Limited (Healthcare)
RIO Tinto Limited (Materials)
TABCORP Holdings Limited (Consumer Discretionary)
Tatts Group Limited (Consumer Discretionary)
Telstra Corporation Limited (Telecommunication Services)
All annual reports are available on the website of these companies.
Choosing a company other than those mentioned above is not permitted.
All accounting standards are available on online database or these standards can also be accessed on AASB web site (www.aasb.gov.au).

Draft a report incorporating the following points in relation to your selected company (not exceeding 2,000 words).
Company- Introduction, Business & operating activities, Finances and Financial performance

Describe the core business of the company. Provide full details of its different activities and or business segments.
Discuss the industry that the chosen company operates in. For example, is it a growing or declining industry; which are the main competitors of the company and what are they doing, etc. Ensure you discuss the implications of these factors.
How the company is funded vis-à-vis internal or external sources? Critically analyse the financial structure of the company?
Describe key elements of Financial Performance reported by the company in the annual report.
Has this company reported any event that occurred after the reporting date? Describe the event.
Were there any changes in accounting policies disclosed in the annual report? If yes, describe those changes.

Assets – PPE and Intangibles

What is the carrying amount of each class of Property, Plant, and Equipment, at reporting date, of your company?
Describe the accounting policies relating to Property, Plant, and Equipment adopted by your company.
Identify the intangible assets reported by the company. Discuss their composition and relevance to the company’s business.
Describe the accounting policies relating to Intangible Assets adopted by your company.
Are any items of Property, Plant, and Equipment, and/or Intangible Assets of your company impaired? If so, identify which assets are impaired, and the amount of accumulated impairment losses.
Note: It is important to refer to relevant accounting standards in your report to score high marks in this group assignment.

Finance
Paper , Order, or Assignment Requirements

Task

You ve been offered a full time position as an assistant financial analyst at Bathurst Metal Works. Your latest assignment involves the analysis of several risky projects. Because this is your first assignment dealing with risk analysis, you have been asked not only to provide a recommendation on the project in question but also respond to a number of questions aimed at judging your understanding of risk analysis and capital budgeting. The memorandum you received outlining your assignment follows:

To: Assistant Financial Analyst

From: Chief Financial Officer

Re: Capital budgeting and risk analysis

You are required to conduct a risk analysis of the following new project, as outlined below. This new project involves purchase of a new laser cutting tool that can be used in Bathurst Metal Works’ manufacturing division. The products manufactured using the new technology are expected to sell for an average price of $300 per unit, and the company analyst performing the analysis expects Bathurst Metal Works can sell 20,000 units per year at this price for a period of five years. To get started this business will require the purchase of a $2 million piece of equipment that has a residual or salvage value in five years of $200,000. In addition, Bathurst Metal Works expects to have to invest an additional $300,000 in working capital to support the new business. Other pertinent information concerning the business venture is as follows:

Initial cost of the equipment $2,000,000

Project and equipment life 5 years

Salvage value of equipment $200,000

Working capital required $300,000

Depreciation method Straight line

Depreciation expenses $360,000

Discount rate or required rate of return 12%

Tax rate 30%

In addition, estimates for unit sales, selling price, variable cost per unit and cash fixed cost for the base- case, worst-case and best-case scenario are as follows:

Base-case Worst-case Best-case

Unit Sales 20,000 15,000 25,000

Price per unit $300 $250 $330

Variable cost per unit $200 $210 $180

Cash fixed cost per year $500,000 $450,000 $350,000

Depreciation $360,000 $360,000 $360,000

Estimate the cash flows for the investment under the listed base-case value assumptions. Calculate the project s NPV for these cash flows. (4 marks).
Evaluate the NPV of the investment under the worst-case assumptions. (4 marks).
iii. Evaluate the NPV of the investment under the best-case assumptions. (4 marks).

Explain how sensitivity and scenario analysis are useful for evaluating project risk? (1.5 marks).
How can break-even analysis be helpful in evaluating project risk? (1.5 marks).

Rationale

This assessment task covers topics 1 to 10 and has been designed to ensure that you are engaging with the subject content on a regular basis.

This will provide an opportunity to apply the concepts in an authentic scenario that you may encounter in the workplace and also:

be able to evaluate and explain the congruence of accounting, finance and treasury functions.

Be able to demonstrate specific technical competencies and skills in utilising quantitative techniques in financial analysis.

Identify all the components to calculate Cash Flow and Net Present Value.

Identify all components to calculate the Cash Flow and Net Present value correctly, with minor flaws.

Identify all the components to calculate the Cash Flow and Net Present Value, with minor errors

Identify all the components to calculate the Cash Flow and Net Present value with substantial errors.

Fails to identify components to calculate the Cash Flow and Net Present Value. Does not demonstrate the ability to compute Cash Flow and Net Present Value, contains multiple and substantial errors.

Advanced Management Accounting
Paper , Order, or Assignment Requirements

Reading case and answer question C
CASE
This is a fictitious case – the focus is to apply your knowledge from the course to the scenario. You can undertake research into the industry but it is not required.

Healthy Drinks Ltd (HD) is a South Australian based company, specialising in the production of 100% real fruit smoothies which are not processed or pasteurised in any way. The business is run from the ‘Healthy House’ headquarters in the northern suburbs, where a state-of-the-art production facility is sited and where all of the employees are located.

Company history

The business incorporated and started trading on 1 January 2013, with the entire shareholding being held equally by the two founders, Stuart Chen and Jane Griffiths, who are also the only directors. Initial finance was provided as follows:

� Stuart and Jane had both made large bonuses in their previous employment and invested $150,000 each as equity

� Bank finance was obtained through a $450,000 loan for 10 years. Interest is at 8% per annum, secured by personal guarantees on the directors’ properties and a $200,000 overdraft facility.

� In 2014, Stuart introduced a further $200,000 as a long-term loan – money that had recently been inherited. It was agreed that interest would be payable at 4% per annum.

Question C:
What implications does the firms� rapid growth and strategy have on the type of Management Control System (MCS) and Management Accounting System (MAS) that may be most suitable for HD? Provide examples of some of the detail that should be included in the firm�s MCS and MAS.

Business plan
Paper , Order, or Assignment Requirements

Prepare a business plan for the venture that you identified in assignments 1 and 2.

The aspects you should address are:

Business Overview: The business overview is a clear description of your business in practical terms. It is a summary of “who”, “what”, “where”, “when” and “why” of the business which gives the reader a clear understanding of how the business will function.

Product / Service: Describe and define what the business is going to offer the target market.

Market Analysis: The market analysis outlines what market the product / service will serve and why.

Competition: Defines competitors and describes the benefit of your service or product to the target market in comparison to your competitors.

Marketing Strategy: Identify the marketing objectives of the product or service including the specific elements of the marketing mix.

Business Structure and Management: Describe the ownership structure and management of your business.

Finances � financial statements / projections: A clear understanding on how the business will be financed to ensure its financial health.

Financial forecasts should include:

Basic assumptions & information
Sales mix forecast (monthly for year 1, quarterly years 2 & 3)
Cash flow forecast (monthly for year 1, quarterly years 2 & 3)
Income statement (years 1 & 2)
Statement of Financial Position (years 1 & 2)
Statement of Cash Flows (years 1 & 2)
Statement of Changes in Equity (years 1 & 2)
Personal expenses (monthly for year 1)
Cost-volume-profit analysis including assumptions (years 1 & 2)
Calculate the financial statement ratios e.g. calculate two ratios on each area – profitability, liquidity and financial (long-term) stability and analysis these forecasts. (years 1 & 2)
Sensitivity analysis – optimistic / most likely / pessimistic including analysis (year 1 only)
(The amount of cash you have available for the venture from personal assets, including assistance from friends and family is AUD$15,000. You may of course seek additional debt or equity funding from other sources.)

Action Plan: An outline of how you are going to achieve your business plans objectives.

Appendix: An appendix or second volume should be included with the submission of the business plan. This will hold all supporting documentation, which backs up the main report.

Rationale
This assessment task has been designed to provide you with the experience in preparing a new business plan by practical use of the techniques and models you have learnt in the subject. Specifically, this assignment assesses your ability to:

list and define the key characteristics and issues involved in starting and running a small business;
identify the sources of finance available to a small business;
describe the components of basic accounting reports and use accounting reports and tools such as budgeting and cost-volume-profit analysis for decision-making;
analyse and evaluate accounting reports using financial ratios and trend data that highlight the profitability, liquidity and solvency/gearing of a small business;
collate data from many sources and create information in the form of reports for a small business.

Paper , Order, or Assignment Requirements

Essay, Finance and Accounting
Based on the above:
1)a. Appraise GDF SUEZs capital structure using the tools discussed in the module.

b. Critically evaluate theoretical advantages and disadvantages of the companys capital structure with regards to the debt and equity structure of the business. How these advantages and disadvantages apply to the specific company? Your answer must be accompanied by significant evidence from the literature (1000 words for 1a and 1b).

2)a. Assess the above company from a short-term financing perspective and comment on the application of the matching principle. What conclusions can you draw, how are they linked with the academic literature?

b. Critically evaluate the potential advantages and disadvantages of the GDF SUEZs strategy around the working capital and backup your answer with significant evidence from the literature (1000 words for 2a and 2b).

 

Coursework, Finance and Accounting
Locate six terms that you consider to be associated with balance sheet liabilities and equity (liabilities and leftovers).
Define each term, and explain why it should be included as a liability or equity in a business organization.

Accounting help 3 part assignment
Paper , Order, or Assignment Requirements

Part I. Complete the following ratio analysis for ABC sporting Goods.

Utilize: BizStats at http://www.BizStats.com

Go to Industry Financials on the Blue Navigation Bar

Select – Corporations 249 not Sole Proprietorships 141

Select Retail Trade

Select Sporting good – Hobby book – Music

Calculate the following ratios: (Based on the last 3 year average)

Return on sales (net profit divided by gross revenues)
Return on assets
Return on net worth
Quick ratio
Current ratio
Inventory turnover (gross sales divided by inventory)
Assets to sales ratio
Total liabilities to net worth
Compare these ratios to those found in BizStats. Comment on any differences and how they impact the value of the business. Identify any significant trends in the business.

Part II. Estimate the business value using BizStats – Valuation Rule for Sporting Goods Stores at BizStats.

Under reports/valuation/valuation-rule-thumb.php

Adjust the business valuation based on your completed calculation and the ratio and trend analysis performed in step I.

Part III. Calculate the viability of purchasing the business based on the following parameters:

You can finance the business for 20% down with an interest rate of 5%, amortization over 20 years. Use the following formula:

Purchase price $100,000, down payment 20% or $20,000 which results in $80,000 being financed.

For $1,000 financed at 5%, the factor to calculate your monthly payment is .66x for every $100 borrowed. That equals $66/month or $792/year.

We now can calculate the free cash flow available to pay the loan amount. We can use the following formula:

Net Profit

+interest paid (use previous years amount from P&L)

+Depreciation and amortization

= Cash flow

For example, if we have $10,000 for our cash flow and our payments are $528 x 12 months = $6,336; then to calculate our DSC or debt service coverage ratio, we divide the Cash flow by the annual debt service or $10,000 / $6,336 =1.58x. If we borrowed $400,000 our monthly payment is $2,640 or $31,680 and if our cash flow is $100,000 then the DSC is 3.16x. Anything greater than 1.20 is considered to be adequate. Comment on the result.

Accounting & The Regulatory Environment
Paper , Order, or Assignment Requirements

In the wake of the accounting and finance scandals of the early 2000s, the regulatory environment for businesses changed dramatically to create more accountability and transparency. Agencies like the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) play a greater role in enforcing and auditing companies for compliance to regulations such as the Sarbanes-Oxley Act of 2002.

Select an accounting regulatory or standards agency (e.g. PCAOB, IASB, etc.)

Select a public company that you either currently work for, have worked for in the past, or one with which you are familiar.

Create a 1,050-word analysis of the regulatory environment:

Please title each paragraph with the bullet points

Identify one or more regulations that would apply to your selected company.
Discuss the ways that compliance with the regulations is beneficial to the company, industry, and consumers.
Examine how the agency you selected and your selected company work together.
Explain the role of ethics in the regulatory environment.
Discuss the ways in which the regulatory environment would directly affect your role in the company in either your current role or your desired career with the organization.