Managerial Finance

Lecturer Name:

Ivan Toner

Subject:

Managerial Finance

Study Mode:

Full time

Yes

Part-time

No

Assignment No.:

1

Assignment Title/Brief:

Group Assignment

Please refer to assignment question provided. WORK SUBMITTED MUST BE THE GROUP’S OWN WORK. This assignment should be completed in a report format, be typed in a 12-point font and space and a half.

Word count:

Maximum 4,000 words

Total %:

50%

Due date(s):

Week 9 12th November 2018 via Turnitin. Please note that only one student in the group should submit via Turnitin and the submission sheet should include all group member’s names and student numbers.

Submit assignment to:

Ivan Toner

Coach Inc. in China is growing at a rapid rate and its strategy team are actively focusing on this growth area for the company. In anticipation of future growth, the directors of the company have built up their finished goods stocks at an even faster rate to make sure that they can meet customer demand.

The Sales Director has reported on the two months of actual sales for July 2018 and August 2018 and has also estimated sales for the next six months:

$

July 22,500,000

August 27,000,000

September 29,000,000

October 30,500,000

November 32,500,000

December 35,000,000

January 36,500,000

February 38,000,000

In August 2018, accounts receivable were 60 days sales. The credit controller has targeted debtor days to reduce from 60 days at 31 August 2018 to 45 days at 30 September 2018 and 30 days on 31 October 2018. He has also targeted 30 days to be maintained thereafter.

The plant manager has provided a production plan to give required level of production as follows:

· September 2018 to February 2019 raw material purchases to be $8,600,000 per month.

· July 2018 and August 2018 raw material purchases were $10,000,000 and $9,000,000 respectively.

· Materials are bought with supplier payment terms of net 45 days.

· Salaries and wages are $2,900,000 per month and paid in each month

· Overheads and utilities are $5,600,000 per month and paid in each month.

The commercial manager has estimated that selling and administrative cost to be as follows:

· September and October 15% of sales

· November and December 14% of sales

· January and February 13% of sales

All these expenses will be paid in the month that they are incurred.

The balance sheet of Coach Inc. in China as at 31 August 2018 was as follows

Interest payable on long and short – term loans is accrued at 10% per annum.

Short – term loan repayments to be made are $2,500,000 at the end of October 2018 and $2,500,000 at the end of January 2019. Half year interest of $8,000,000 is payable in January 2019.

Depreciation (a manufacturing cost) runs at $700,000 a month and cost of sales is 70% of sales.

Materials used during September 2018 and October 2018 are expected to be $11,000,000 for each month. Corporation tax on profits can be calculated at 50%. Corporation tax of $5,000,000 is expected to be paid in December.

Assessment Criteria: