Reference no: EM131086522 , Length: 4500 words

Assignment Brief

As part of the formal assessment for the HNC/D 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:

- Understand the sources of finance available to a business

- Understand the implications of finance as a resource within a business

- Be able to make financial decisions based on financial information

- Be able to evaluate the financial performance of a business

Assignment Task One

In no more than 1,000 words, write a critical discussion, supported by academic literature, addressing the following for a listed company in Hong Kong:

a) Identify the potential sources of finance available and explain why financial planning is important.

b) Identify and evaluate both long term and short term sources of finance for a project implemented by a listed company. Offer definitions, and assess the advantages and disadvantages for each of the sources you identify and when each would be most appropriate.

c) Analyse the costs associated with different sources of finance and explain how these costs impact the financial statements.

d) Assess the information needs of three stakeholders - such as owners or financial institutions

Assignment Task Two

Aston Ltd is considering investing some of their capital in new premises. This will entail capital expenditure of some $1,000,000. This new project is set to last for ten years and is likely to attract the following budgeted inflows (money coming into the business) and budgeted outflows (money going out of the business):

Years	Cash Inflows	Cash Outflows
	$'000	$'000
0	0	1000
1	110	30
2	120	35
3	130	40
4	140	45
5	150	50
6	160	55
7	170	60
8	180	65
9	190	70
10	200	75

Note the $1m in year 0 represents the initial capital expenditure.

The business is built up of both equity and debt, and in terms of this specific project it would be funded by $500,000 equity requiring 8% return, and $500,000 of debt requiring 12% return.

In no more than 1,000 words, and using the information above, complete the following:

a) Identify the Net Value or the Net Cash Flow (before applying the discount factor) of the project and also the Net Present Value (after applying the discount factor). Analyze and explain the advantages and disadvantages of the techniques adopted here.

b) Identify the Undiscounted Payback period and the Discounted Payback period and evaluate whether the pricing strategy that has generated the inflows is viable in this scenario

c) Assess whether Aston Ltd should continue with this project.

Ensure that where possible your answer is supported by academic sources.

Assignment Task Three

In no more than 1,500 words:

a) Identify and discuss the purpose of the two main financial statements shown below for a UK company Tesco plc.

b) Evaluate why different formats of financial statements are used for different types of business in UK.

c) Using the financial statements detailed below, for Tesco plc, calculate a series of profitability ratios and liquidity ratios, analyze and interpret the results that you achieve and comment on the company's performance.

Year ended 22 February. 2014	Notes	52 weeks 2014 £m	52 weeks 2013 (restated)fm
(embroil operations
Revenue	2	63557	63.406
Cost ogsaPes		(59,547)	(59,252)
Gross profit		4,010	4,154
Admingratiye expenses		(1,657)	(1482)
Profits asses aring on propertrelated items		218	(290)
Operating profit		2,631	2.382
Share et postiax profits djont ventures and associates	13	60	72
Finance income	5	132	120
Finance costs	5	(564)	(517)
Profit before tar	3	2,259	2.051
Taiaion	6	(341)	(529)
Profit for the year from continuing operations		1,912	1,528
Discontinued operations
Loss 'of the year from discontinuted operation	7	(942)	(1.504)
Profit for the year		970	24
Attributable ter
Owner of the parent		974	28
Nen-controIng nterests		(4)	(4)
		970	24

Group balance sheet

	Notes	22 February 2014 fin	23 February 7013 fin
Non-current assets
Goodvnl and other ritan4bleassets	10	3,795	1362
nrcperty,ptantard etwOment	II	24,490	24870
hwesb-nent property	12	227	2,001
1r...fitments injont ventures and associauts	13	286	494
Other nvestments	14	1,015	818
Walt and advances to customers	17	3,210	2,465
Derivative (nand.); anuments	21	1,496	1,965
Deferred tax assets	6	73	58
		34,592	37,033
Current assets
liwentories	IS	3,576	3,744
Tradeand other receivables	16	2,190	2,525
Loans and edam*. to <women	17	3,705	3.094
Dethethe Una/KW 'nstruments	21	80	58
Current tax assets		12	10
Short term arestments		1,016	522
Cash and ash equvants	18	2,5%	2,512
		13,085	12,465
Assets of thedisposalgroup3rd non-currentassetsclassified as held for sale	7	2,487	631
		15,572	13.096
Current I 'blades
Trade and other payables	19	(10,595)	(11,094)
Financial liablities:
Borronirgs	20	(1.910)	(766)
Derivatise fsncial :laments and other fabates	21	(99)	(121)
Cuuorner deposits and deposes from banks	23	(6.858)	(6,015)
Current tax labities		(494)	(519)
Pro/is:rim	24	(250)	(188)
		(20.206)	(18,703)
liablees d the d. sposal group dash led as held for sale	7	(1,193)	(282)
Net anent labiities		(5,827)	(5,889)
Non-current liablides
Eh-iamb& liaba eies:
Batwings	20	(9,303)	(10,068)
Derivative &uncial intrumenh and other Eateries	21	(770)	(759)
Post-ernpSoyment benefit captions	26	(3,1%)	(2,378)
Deferred tax I abides	6	(594)	(1,006)
Pro/arms	24	(183)	072)
		(14,043)	(4.483)
Net assets		14,722	16%1
Equity
Share capital	27	405	403
Share Inman		5,080	5,020
Allother reserves		(498)	685
Retaned earrings		9,728	10535
EquityattributeMe to owners of the parent		14,715	16643
Non-control nu interests		7	18
Total equity		14,722	16,661

References (via hkebsco in iLearn)

Marsh, Clive (2012) Financial Management for Non-financial Managers, In Strategic Success Series, London: Kogan Page.

Finch, Brian (2010) Effective Financial Management, In Creating Success. London :Kogan Page.

Vernimmen, Pierre (2011) Corporate Finance: Theory and Practice, 3rd ed. Chichester, West Sussex : John Wiley & Sons, Inc.

BTEC textbook

Davies, J., (2011), BTEC Level 4/5 HNC in Business

Other Reference books

Weetman, P. (2013) Financial and Management Accounting: An Introduction, Pearson

Lumby, S. and Jones, C. (2000) The Fundamentals of Investment Appraisal, Thomson Learning

Magazines, journals and newspapers
Accounting, Auditing and Accountability Journal
The International Journal of Accounting?
The Economist?
The Financial Times

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