Recent Papers 03-29-2022

Using the accounts, and notes, for Trust plc, write a report of 2000 words to management on the performance of the company

ASSESSMENT

1.1 Summary

This is an individual work.

Weighting: 100%

Word count: 3,000

Submission deadline: 13 May 2022

Learning outcomes evidenced by this assignment

All the Learning outcomes is evidenced in the assignment.

Submission procedure 

  • Students are required to submit their reports electronically via Turnitin (see further instructions in the Submission section below). If students cannot submit their reports to Turnitin for whatever reason, they will need to email their works to me (k) by the deadline.

Return of feedback and marked work

  • Feedback will be provided to students in written comments on the marked scripts.

1.2 Introduction

This assessment requires students to show a sound understanding of several areas in financial and management accounting and the ability to critically evaluate a business’ performance.

2. Details of the task

SECTION A

You are provided with the details of Trust’s financial statements as below:

Statements of Financial Position as at 31st March

 

 

2020

 

2021

 

£m

 

£m

 

£m

 

£m

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

   Property, plant & equipment

 

 

 

 

 

 

 

        Land & buildings

 

 

450

 

 

 

500

        Fixtures & fittings

 

 

150

 

 

 

180

 

 

 

600

 

 

 

680

Current assets

 

 

 

 

 

 

 

   Inventories

350

 

 

 

400

 

 

   Trade receivables

200

 

 

 

300

 

 

   Cash at bank

10

 

 

 

20

 

 

 

 

 

560

 

 

 

720

Total assets

 

 

1,160

 

 

 

1,400

 

 

 

 

 

 

 

 

Equity & liabilities

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

   £1 ordinary shares

 

 

400

 

 

 

400

   Retained earnings

 

 

210

 

 

 

220

 

 

 

610

 

 

 

620

Non-current liabilities

 

 

 

 

 

 

 

   Borrowings – 5% loan notes (secured)

 

 

300

 

 

 

400

Current liabilities

 

 

 

 

 

 

 

   Trade payables

200

 

 

 

300

 

 

   Taxation

30

 

 

 

20

 

 

   Bank overdraft

20

 

 

 

60

 

 

 

 

 

250

 

 

 

380

Total equity & liabilities

 

 

1,160

 

 

 

1,400

Statement of Profit & Loss for the year ending 31st March

 

 

2020

 

 

2021

 

 

 

£m

 

 

 

£m

 

Revenue

 

 

3000

 

 

 

4000

Cost of sales

 

 

-2100

 

 

 

-2850

Gross profit

 

 

900

 

 

 

1150

Operating expenses

 

 

-350

 

 

 

-550

Operating profit

 

 

550

 

 

 

600

Interest payable

 

 

-50

 

 

 

-60

Profit before taxation

 

 

500

 

 

 

540

Taxation

 

 

-60

 

 

 

40

Profit for the year

 

 

440

 

 

 

500

Notes to the accounts:

  1. The market value of the shares of the business at the end of the reporting period was £3.00 for 2020 and £2.00 for 2021.
  2. All sales and purchases are made on credit
  3. The cost of sales figures can be analysed as follows:

 

     2020

 

      2021

 

 

 

£m

 

£m

 

 

Opening inventory

350

 

250

 

 

Purchases

2000

 

3,000

 

 

 

2,350

 

3,250

 

 

Closing inventory

-250

 

-400

 

 

Cost of sales

2100

 

2,850

 

  1. At 31st March 2019 the trade receivables stood at £250m and the trade payables at £200m
  2. A dividend of £40m had been paid to the shareholders in respect of each of the years
  3. The business employed 14,000 staff at 31st March 2020 and 19,000 at 31st March 2021
  4. The business expanded its capacity during 2021 by setting up a new warehouse and distribution centre
  5. At 1st April 2019, the total equity stood at £450m and the total of equity and non-current liabilities stood at £650m.

Required:

Using the accounts, and notes, for Trust plc, write a report of 2000 words to management on the performance of the company. This report should be done by analysing the following ratios for each of the two years presented.

  1. Profitability Ratios including Return on Capital Employed, Operating Profit and Gross Profit margin
  2. Efficiency ratios including Inventory Turnover days, Account Receivable Days and Account Payable Days
  3. Liquidity Ratios including Current ratio and acid test ratio
  4. Investment ratios including Earnings per share and Price Earnings ratio
  5. Financial Structure ratios including interest cover and gearing ratio marks) (Total: 50 Marks)

SECTION B

As an Accountant within the Financial and Management Accounting department at Manor Ltd, you have been asked to write an essay on the following financial and management concepts:

1. Analyse the objectives of budgeting to Manor Ltd (10 marks)

2. Differentiate between financial and management accounting.(10 marks)

Two projects being considered are mutually exclusive and have the following projected cash flows:

Year

Project A

Project B

0

−$50,000

−$50,000

1

26,000

0

2

17,625

0

3

15,000

0

4

10,000

0

5

32,000

99,500

Required:

(a) Calculate the Payback Period for the projects A & B                (5 marks)

(b) Calculate the Net Present Value for the projects A & B, using a discount rate @ 10% (10 Marks)

(c) Which projects would be chosen and why? (5 marks)

Show your calculations/explanations

2.1 Guidance

  1. Try to be reader-friendly. Your work should not have more than 25 pages (excluding the front sheet, the title page, abstract, and the contents page).
  2. You should link your assessment of the firm’s financial performance to changes in the competitive environment, the firm’s operations and its strategies. For example, you will need to show how changes in the firm’s sales turnover may be driven by those in the competitive environment, the firm’s operations and its strategies. Make sure that all changes in the firm’s financial performance are well justified.
  3. Extra credits will be given to students who show a high level of depth in their analyses and the ability to link the firm’s financial performance to changes in the competitive environment, the firm’s operations and its strategies.
  4. You should comment on the share price movement and explain that movement by changes in its financial performance during the period.
  5. Use a wide range of references, both academic and business. Using the accounts, and notes, for Trust plc, write a report of 2000 words to management on the performance of the company

2.2 Structure

Your report should contain:

  • Front sheet
  • Word count (excluding appendices and reference list)
  • Title page, including the given title in full
  • Abstract (no more than 50 words)
  • Contents page
  • Introduction
  • Main body with appropriate headings
  • Conclusion
  • Numbered appendices

2.3 Presentation

Your work should be word processed in accordance with the following:

  • Font style, Lucida Sans, font size 12
  • 1.5 line spacing
  • The page orientation should be ‘portrait’
  • Margins on both sides of the page should be no less than 2.5 cm
  • Pages should be numbered
  • Your name should not appear on the script
  • Your student number should be included on every page

3. Skills advice

Refer to your material provided in your skills modules to make sure that you have conformed to academic conventions.  Pay particular attention to:

  • Your introduction,
  • Your conclusion,
  • The use of headings and/or signpost words
  • Paragraph structure

Do refer to Info skills at http://writeitright.uelconnect.org.uk/home/ and http://infoskills.uelconnect.org.uk/

Referencing

The university expects students to use Harvard referencing as specified in the book Cite them Right.

4. Word count

Your word count should not include your abstract, contents, reference list or appendices. You need to provide your word count in the frontsheet.  Failing to provide your word count in the front sheet and exceeding/ failing to meet the word count by more than 10% will result in a penalty of 10% of your marks for your work.  If your work is significantly shorter, then you will probably have failed to provide the level of detail required.

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