PGBM01: FINANCIAL MANAGEMENT & CONTROL
UNIVERSITY OF SUNDERLAND
LEVEL M
MODULE: FINANCIAL MANAGEMENT & CONTROL
ASSIGNMENT CODE: PGBM01
INSTRUCTION TO CANDIDATES:
- Assessment weight: 100% of module
- Outcomes Assessed: All module learning outcomes, knowledge and skills, are assessed in this assignment.
- This assessment is in three parts, please answer all elements.
- Please note that this is an individual assignment and the policy of the University on “Policy on Cheating, Collusion and Plagiarism” applies.
- Please write your Tutor’s name clearly on the front of the assignment.
PART 1 (36%)
The following are extracts of the Income Statement and Balance Sheet of Loyd plc.
| |
2020 (£000) |
2021 (£000) |
| Non-current Asset |
|
|
| Vehicle |
20.00 |
18.00 |
| Furniture |
8.00 |
5.00 |
| |
28.00 |
23.00 |
| Current Assets |
|
|
| Inventory |
4.90 |
13.70 |
| Receivable |
8.80 |
11.60 |
| Balance at Bank |
13.90 |
11.50 |
| Cash In hand |
2.60 |
4.20 |
| Total current asset |
30.20 |
41.00 |
| |
|
|
| Current Liabilities |
16.70 |
30.80 |
| |
41.50 |
33.20 |
| Shareholders’ equity |
20.00 |
20.00 |
| Retained Profit |
16.00 |
12.50 |
| General reserve |
5.50 |
0.70 |
| |
41.50 |
33.20 |
| |
|
|
| Sales |
30.00 |
40.00 |
| Cost of Sales |
8.00 |
9.00 |
| Net Profit |
16.00 |
18.50 |
| Investors Ratios: |
|
|
| Dividend Per Share |
12 Pence |
18 Pence |
| Number of Shares Issued |
20,000 units |
20,000 units |
| Average share price |
£2.50 |
£3.30 |
The following ratios indicates the benchmark performance of the industry average for the year 2021:
| Ratios |
Measures |
| Gross Profit Margin |
65 percent |
| Net Profit Margin |
55 percent |
| Receivable Collection Period |
68 days |
| Earning Per Share |
50 pence |
| Dividend Yield |
3.2 percent |
| PE ratio |
6.5 times |
You are required to calculate the following ratios for both years:
- Gross Profit Margin ( 2 Marks)
- Net Profit Margin ( 2 Marks)
- Current Ratio ( 2 Marks)
- Quick Ratio ( 2 Marks)
- Receivables Collection Period ( 2 Marks)
- Earnings Per Share ( 2 Marks )
- Price Earning Ratio ( 2 Marks )
- Dividend Yield ( 2 Marks )
(Total : 16 Marks)
- Prepare a report to the management on the following category of the ratios:
(i) Profitability
(ii) Efficiency
(iii) Liquidity
(iv) Investor’s Ratio
(Total : 20 Marks)
PART 2 ( 34% )
The net operational cash flows of investment schemes of Futsal and Restaurant as follows:
| Year |
Futsal (£000) |
Restaurant (£000) |
| 0 |
(82) |
(82) |
| 1 |
20 |
30 |
| 2 |
30 |
30 |
| 3 |
40 |
40 |
| 4 |
40 |
50 |
| 5 |
50 |
30 |
Given that the residual value for futsal and Restaurant are £18,000 and £ 22,000 respectively while the required rate of return is 12%.
- You are required to calculate, for both schemes, the:
- Accounting Rate of Return ( 3 Marks )
- Payback period ( 2 Marks )
- Net Present Value ( 6 Marks )
- Internal Rate of Return ( 5 Marks )
(Total : 16 Marks )
- Critically evaluate all forms of investments appraisal techniques and conclude which particular technique is superior among all. (Total : 13 Marks )
- Based on the investment appraisal techniques and its superiority, provide clear recommendation for a choice of either Futsal or Restaurant investment scheme assuming a company is not able to undertake both investment schemes at the same time or mixed of Futsal and Restaurant. (Total 5 marks)
PART 3 ( 30%)
Mr Patrick Fernandez, the Finance Director of Ray plc, is planning to raise funds to fund an acquisition project. He has decided to use the following sources.
- Issue bonds amounting to £5million with an annual coupon rate of 6.5%.
- Issue 500,000 units of preferred shares for £00 each with a fixed dividend rate of 8%
- Issue 100000 units of ordinary shares for £00 each. Mr. Patrick expect to pay an annual dividend of 10% to all its ordinary shareholders.
Given that the tax rate of the company is 26%.
You are required to:
- Calculate the total funds Mr. Patrick wants to raise to fund the acquisition. (2Marks)
- Calculate the net cost of debt of the bonds issued. (2 Marks)
- Calculate the WACC for the total funds raised for the acquisition. (4 marks)
- Explain and critically evaluate main sources of finance that could be utilized by a company during the times of COVID-19. (22 marks)
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