Financial Report

FACULTY OF BUSINESS AND SOCIETY

Assessment Cover Sheet Resit period 2019/20

Module Code:

AF4S31

Module Title: STRATEGIC FINANCIAL

MANAGEMENT

Module Lecturer:

Assessment Title and Tasks: FINANCIAL INTERPRETATION AND SOCIAL RESPONSIBILITY

Assessment No. 1 of 2 Report

Date Set:

Submission Deadline:

Return Date:

Part A: Regulations and Support

Extenuating Circumstances If there are any exceptional circumstances that may have affected your ability to undertake or submit this assignment, make sure you contact the Advice Zone on your campus prior to your submission deadline.

Fit to sit policy: The University operates a fit to sit policy whereby you, in submitting or presenting yourself for an assessment, are declaring that you are fit to sit the assessment. You cannot subsequently claim that your performance in this assessment was affected by extenuating factors.

Plagiarism and Unfair Practice: When submitting this assessment, you will be asked to declare that it is your own work and that the sources of information and material you have used (including the internet) have been fully identified and properly acknowledged as required1. Additionally, the work presented should not have been submitted for any other assessment. You should also understand that the Faculty reserves the right to investigate allegations of plagiarism or unfair practice which, if proven, could result in a fail in this assessment and may affect your progress.

1 University Academic Misconduct Regulations

Details of Submission: Please note that the 5 working days late submission rule does not apply to resit assessments. If the assessment is submitted after the deadline then it will be classed as a failure unless extenuating circumstances are applied for and accepted (USW Advice Centre to be consulted).

Part B: Marking and Assessment

(to be completed by Module Lecturer) This assignment will be marked out of 100% This assignment is bonded. Assessment Task: An individual word-processed report, not exceeding 3,000 words based on the requirement, referenced in accordance with the Harvard system. Learning Outcomes to be assessed (as specified in the validated module descriptor https://icis.southwales.ac.uk): • To be able to critically assess, apply and evaluate the issues and techniques of

strategic financial management Grading Criteria:

Section Weighting Criteria (all sections)

1

Prepare a report for Aled and Simon which analyses and evaluates the financial position of Prestige using an appropriate range of financial ratios, commenting on the factors affecting the use of ratio analysis. You should highlight any areas for concern and advise the directors on how they could address these issues.

45%

See the FBS marking criteria for postgraduate level assessments 2

Discuss the roles played by directors Aled and Simon, acting as agents for shareholders of Prestige, and explore whether it is possible for a public limited company to satisfy shareholders needs and adopt a position of corporate social responsibility to other stakeholders.

45%

Report structure, layout and referencing 10%

The weightings provided above give an indication of the relevant importance of each area of the assignment and may be used to help plan your allocation of time and the available word count.

Faculty of Business and Society Marking Criteria for Postgraduate Level Assessments

Grade Relevance Knowledge Analysis Argument and Structure Critical Evaluation Presentation Reference to Literature

D is

tin ct

io n

86 – 100%

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 ample excellent evidence showing that all the learning outcomes and skills appropriate to that level are fully satisfied. The work is exemplary in all the categories shown above and demonstrates 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 skills appropriate to that level are fully satisfied. The work is outstanding in the majority of the categories shown above or demonstrates particularly compelling evaluation and elegance of argument, interpretation or discourse.

70 – 75%

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 showing that all the learning outcomes and skills appropriate to that level are satisfied. The work will be excellent in the majority of the categories shown above or demonstrates particularly compelling evaluation and elegance of argument, interpretation or discourse.

M er

it

60 – 69%

Directly relevant to the requirements of the assessment

A substantial knowledge of relevant material, showing a clear grasp of themes, questions and issues therein

Comprehensive analysis - clear and orderly presentation

Well supported, focussed argument which is clear and logically structured.

Contains distinctive or independent thinking; and begins to formulate an independent position in relation to theory and/or practice.

Well written, with standard spelling and grammar, in a readable style with acceptable format

Critical appraisal of up-to- date and/or appropriate literature. Recognition of different perspectives. Very good use of a wide range of sophisticated source material.

P as

s

50 – 59%

A reasonable attempt to address the requirements of the assessment: may drift away from this in less focused passages

Adequate knowledge of a fair range of relevant material, with intermittent evidence of an appreciation of its significance

Reasonable analytical treatment which has a clear purpose

Generally coherent and logically structured, using an appropriate mode of argument.

It will contain some distinctive or independent thinking; may begin to formulate an independent position in relation to theory and/or practice.

Competently written, with only minor lapses from standard grammar, with acceptable format

Draws on a good variety of literature which includes recent texts and/or appropriate literature including a range of appropriate source material.

40 – 49% Some correlation with the requirements of the assessment but there is a significant degree of irrelevance

Basic understanding of the subject but addressing a limited range of material

Some analytical treatment, but may be prone to description, or to narrative, which lacks clear analytical purpose

Some attempt to construct a coherent argument but may suffer loss of focus and consistency.

Work which expresses a coherent position only in broad terms and in uncritical conformity to one or more standard views of the topic

A simple basic style but with significant deficiencies in expression or format that may pose obstacles for the reader

Evidence of use of appropriate literature. Frequently only uses a single source to support a point. Weak use of quotation.

Fa il

35 – 39% Relevance to the requirements of the assessment may be very intermittent, and may be reduced to its vaguest and least challenging terms

A limited understanding of a narrow range of material

Largely descriptive or narrative, with little evidence of analysis

A basic argument is evident, but there is a lack of clarity and coherence

Some evidence of a view starting to be formed but mainly derivative.

Numerous deficiencies in expression and presentation; the writer may achieve clarity (if at all) only by using a simplistic or repetitious style

Barely adequate use of literature. Over reliance on material provided by the tutor.

The evidence provided shows that the majority of the learning outcomes and skills 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 skills appropriate to that Level are satisfied. The work will be weak in some of the indicators.

0-29% The work examined is unacceptable and provides little or no evidence of the knowledge, understanding and skills appropriate to the Level of the qualification. The evidence shows that few if any of the learning outcomes and skills appropriate to that Level are satisfied. The work will be weak in the majority or all of the indicators.

1

AF4S13 STRATEGIC FINANCIAL MANAGEMENT RESIT ASSIGNMENT - REPORT

INDIVIDUAL REPORT Assignment brief Prestige Co specialises in producing engineering components, which are sold throughout the world. The business was set up by two skilled engineers Aled West and Simon Smith. In 2013 the business was listed in order to finance an expansion into new premises, and very early in 2018 the company invested in a fleet of delivery vehicles proudly carrying their company logo. This investment was mainly funded by the issue of bonds at 9% interest. The business has continued to grow and Aled, who has taken on the role of Operations Director, and Simon, who is Director of Product Design, continue to operate a very hands-on approach to managing the production aspect of the business. There is a finance team who manage the day to day accounting transactions and, until recently, Aled and Simon have relied on their school friend Sean Arnold for all aspects of financial strategy and leadership. Unfortunately, though in the last year Sean has not been able to dedicate the time needed to support the business for personal reasons, and Aled and Simon are worried as they do not feel they understand the finances well enough. This has been brought into focus for two reasons: firstly, Aled and Simon have arranged to meet with the bank next month about their plans to replace the production line machinery, which they are hoping the bank will help finance; and secondly there is growing pressure from a major shareholder Sir Timothy Long, a well-known and respected environmentalist, to invest in the latest environmentally friendly production machinery. Nicknamed ‘ENGOOD’ this machinery will cost an additional $1,000,000 compared to the next best, but less environmentally friendly, option. Aled and Simon are concerned about the extra cost involved in implementing ENGOOD and the effect this will have on profits and on the market value of the business. In addition they would prefer to be allowed to make what they think is the best decision for the business. Other members of the board are keen to choose ENGOOD as they say “it would reduce Prestige’s carbon emissions to an industry leading low level, which can only be good for the business in the long run”. You have just been appointed as a management trainee at the company and the directors have asked you to assist them in preparing for the meeting with the bank.

2

The directors have provided you with the following financial information: 2018 2017 $'000 $'000 Sales

44,900

32,000

Cost of sales

35,450

23,000 Gross profit

9,450

9,000

Admin expenses

1,800

1,500 Distribution costs

4,050

2,000

Finance costs

526

365 Profit before taxation

3,074

5,135

Taxation

922

1,541 Profit after taxation

2,152

3,594

2018 2017 $'000 $'000 $'000 $'000 Non-current assets

17,500

15,300

Current assets

Inventory 5,500

2,900

Trade receivables 5,500

2,600

11,000

5,500

Total assets

28,500

20,800

Capital and reserves

Share capital 50c shares

7,200

7,200

Reserves

6,852

5,700

14,052

12,900

Non-current liabilities

9% bonds

3,500

3,500

Current liabilities

Trade payables 6,648

2,400 Overdraft 4,300

2,000

10,948

4,400 Total Equity and liabilities 28,500 20,800 Dividends of $1,000,000 in 2018 and $1,500,000 in 2017 were distributed to shareholders. The shares of Prestige are currently trading at $3.00 compared to $3.50 this time last year.

3

Required:

1. Prepare a report for Aled and Simon which analyses and evaluates the financial position of Prestige using an appropriate range of financial ratios, commenting on the factors affecting the use of ratio analysis. You should highlight any areas for concern and advise the directors on how they could address these issues.

Calculations to support your advice should be included as an appendix to the report.

2. “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game” (Milton Friedman, 1970 New York Times).

Discuss the roles played by directors Aled and Simon, acting as agents for shareholders of Prestige, and explore whether it is possible for a public limited company to satisfy shareholders needs and adopt a position of corporate social responsibility to other stakeholders. Marks are available for the report format, clarity of argument and the accuracy of referencing.

Assessment guidance The word limit for the report is 3,000 words (+/- 10%), excluding references, and the word count should be shown at the end of the document. The document must be your own work, but you are expected to demonstrate that you have utilised multiple literature sources from the academic, professional and technical literatures. Please note that sites such as Wikipedia and Investopedia, whilst useful as a starting point for your research, are not suitable sources for your assignment, so you need to widen your search to include other texts and sources. The use of literature must be referenced using the Harvard system. Failure to acknowledge the work of others is plagiarism and will result in a case of Academic Misconduct being filed by the assessor. A guide published by the library lists the most common types of references with examples. The guide is published at: https://advice.southwales.ac.uk/a2z/referencing-plagiarism-and- good-academic-practice/