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You are part of a team of Financial Analysts for ARUL Consulting who have been asked to review BAE Systems plc’s working capital management policies.
Practical – Working capital Management
Financial Management of Organisations
5 minutes per student
Assessed Learning Outcomes
1 – 2
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Working Capital Management Meeting- TASK
You are part of a team of Financial Analysts for ARUL Consulting who have been asked to review BAE Systems plc’s working capital management policies. You are coming to the end of the review and have been asked to a meeting with the Director (played by your lecturer) and Senior Manager. Its last Annual Report was for the year to 31 December 2021. The purpose of the meeting is to brief the Director and Senior Manager on your findings .
Prior to the meeting, you will be allocated one of four elements to cover, by the Director. At the briefing, each Analyst will be asked about certain aspects of working capital management :
Company Background - (Knowledge of the Business)
Analysis of receivables, payables, inventory
Analysis of liquidity risk of the company and what has been done to mitigate it
The effect of the companys working capital management on the profitability of the business
Each analyst will be asked to talk for
2 minutes on their critical area. If you exceed your time limit, the Director will stop you, in order to keep the meeting moving. Therefore, you should focus on delivering a concise and precise briefing on the critical areas you have been allocated.
The meeting will then move on to a group discussion in which you are expected to speak and question each other about the task topic.The Director (played by your lecturer) and Senior Manager will simply be observing during this and will have no interaction. This will be for
Once all analysts have completed their delivery, Director and Senior Manager will then ask the analysts questions for a further
2 minutes each.
POINTS TO CONSIDER
The purpose of the analysis is to review the appropriateness of BAE Systems plc’s working capital management policies on shareholder wealth
Explain the history of the company , its size , locations, position in relation to competitors
You would be required to discuss and analyse its position in relation to its competitors over the last 10 years of trading in all the above
Analysis of payables, inventory
A detailed discussion as to BAE Systems plc/s policies in each area with the appropriateness of those policies. For example ,its policies on payables was to give 7 days credit , in your opinion this was not appropriate with a reason(This is solely used as an example and is incorrect). You can also do computations based on your research in this section
Analysis of Liquidity
This should include a discussion on what the risk to liquidity is to BAE Systems and what BAE Systems has done to ensure that this is mitigated.
Effect on the profitability of the business
Discuss whether the key objectives of shareholders were met and if not give reasons
An ability to discuss and analyse , key concepts of corporate finance
An ability to discuss and analyse , specific items of working capital management
An ability to discuss the the relationship between operating cash flows and net income
An ability to discuss the financial environment
An ability to put your arguments and points to a group using your
This is a practical assessment that discusses key financial management concepts as well as your ability to present yourself in a working environment and assesses employability throughout Students should demonstrate knowledge and understanding of working capital management by correctly applying that knowledge to BAE Systems plc. Students are NOT expected to talk about the theory of working capital , but to apply those to BAE Systems
plc. To obtain a pass mark and to achieve better marks, the majority of the weighting in the marks is on analysis and application.
% Mark allocation
Knowledge & understanding of working capital management
Ability to analyse source information and respond to questioning
Ability to present clearly, confidently & concisely
You may bring a small note card to the meeting (no bigger than A5) containing any data or key bullet points. However, you
MUST NOT read from a script when you are speaking. Reading from a script will incur a 25% penalty to your overall mark (e.g. a mark of 65 would be reduced to 40), although a pass mark will not be reduced to a fail.
READING LIST / RESOURCES
The annual report for the company for the year to 31 December 2021
Other information you can find about the company.
Other general news issues/stories that may have an impact on working capital.
Financial Management textbooks will help in terms of knowledge in a practical discussion of working capital management