Reference no: EM132849232 , Length: word count:2300

MOD007667 Finance for Decision Making - Anglia Ruskin University

Assignment brief - case study

Covid-19 has had a significant impact on business over the last 12 months. Some businesses, such as supermarkets, have done well but many others have gone into liquidation. It will be necessary for all businesses to re- assess their plans for the immediate future as the restrictions imposed in the UK are gradually eased. The world has changed since 2019 and many people have changed their habits and preferences.

To help with this planning, you should use four ratios (not more than one from each category) to report on which aspects of the business have been most affected this last year. Using this information suggest how the main budget may be used to plan activities for the next year. Explain how Performance management can be used to monitor the plans and guide decision making throughout the next twelve months. With mass vaccinations gradually being rolled out across the globe, your business is looking to develop a new product or service for the post Covid-19 world. The investment proposed is £50 million and should have a lifespan of ten years. You are to suggest a suitable project, and, using NPV and IRR appraisal methods, show how (if) the investment will benefit your company.

Required:

Suppose you are appointed as the CFO for ONE of the companies listed below [I have added links. Osiris seems to be better as it has the up
to date 2020 accounts, Fame has most only up to 2019] :

SSP Group PLC (The Company is a leading operator of branded food and beverage outlets in travel locations across 29 countries in the United Kingdom, Europe, North America, Asia Pacific and the Middle East.) Make sure you find the correct company, there are several with similar names.

BP PLC (The Company is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals.)

Ocado Group (The principal activities of the group are the retailing, logistics and distribution of grocery and consumer goods and the development and monetisation of intellectual property and technology for the online retailing, logistics and distribution of these goods.)  Adidas Group (The company designs, develops, produces and markets a broad range of athletic and sports lifestyle products.)

J D Wetherspoon PLC (The principal activities of this company are the development and management of public houses.)

You are required to write a report to the senior management team, fully referenced, and addressing the following:

1. Evaluate financial performance: Choose FOUR categories from the list of five categories of financial ratios below and use ONE financial ratio from each category to assess the financial health of your chosen company using past 5-year financial information:
1. Profitability
2. Efficiency
3. Liquidity
4. Financial gearing
5. Investment

Note: Analyse your chosen financial ratios using information from financial statements. Considering word limit, please choose ONE financial ratio from FOUR different categories listed above; therefore, you should focus on four ratios in total in this part of analysis. Critical analysis of the four ratios under four categories is required for a good work. Please critically evaluate past five- year firm performance, using your chosen ratios and discuss the problems and limitations of financial ratios as a tool of financial analysis before make recommendation to the board of directors. Create your own small tables, diagrams and charts in your analysis and present professionally.

Comparison with competitors and industry will be helpful. Suggested wordcount: 800 - 900 words.

2. Discuss the advantages and disadvantages of making a budget for the next year. Explain two different approaches to drawing up a financial plan for the business. Critically evaluate how performance management can be used to make better decisions. Suggested wordcount: 750 - 800 words.

3. Investment appraisal: You plan to use NPV and IRR techniques to evaluate the project. Critically discuss NPV and IRR techniques and the implications of the investment on the Company. Risk and uncertainty in investment appraisal should be considered before you make recommendation. The discount rate is 10% for the Company (Ignore inflation and taxation). Discuss the best way to finance this project.

Note: Please present NPV and IRR results using small tables. You need to make the decision on which investment appraisal format that you will choose. The project will be based on your chosen company, therefore, you have the flexibility to decide the project using your ESTIMATE. The investment should be around £50m, but how the money is invested would depend on the nature of the investment. Sensitivity analysis will be helpful to analyse different scenarios for the appraisal. Suggested wordcount: 650- 750 words.

4. Appendix:

Supporting information to help the senior management team make their final decision.