Demonstrate basic quantitative skills applicable to business problems

Assignment Brief

Unit Title: Economics of Corporate Finance

Unit Learning Outcomes Assessed

1. Demonstrate basic quantitative skills applicable to business problems
2. Evaluate financial information in an international setting
3. Prepare reports and presentations of a type that are likely to be encountered in many corporate job situations

Assignment Details and Instructions.

The assignment details are provided in the assignment excel file on Moodle. All the data that you need to complete the tasks is provided for you in this file. You have been allocated two companies to analyse (see the final worksheet on the Excel file). Failure to analyse the specific companies you have been allocated will result in a mark of 0 being awarded for question 1.

There are two topics to cover: 1. Advising on investing in a FTSE-100 company, and 2. Project Appraisal of high speed rail between London and Manchester. Both topics should be answered in the form of a report; make sure that you include a brief introduction and conclusion in your reports.

Each report has a word limit of 2000 words; this is not a target and you may find that you can cover the tasks with significantly fewer words – short assignments will not be marked down simply because they are short.

Sample Answer

Report 1: Advising on Investing in a FTSE-100 Company

Introduction

This report analyses the financial performance of the assigned FTSE-100 company to advise on whether it is a good investment. The analysis covers key financial ratios, recent financial trends, and comparison with industry peers. Recommendations will be based on the company’s financial health, market position, and risk factors.

Financial Analysis

• Profitability: Review net profit margin, return on equity (ROE), and earnings per share (EPS). Explain if the company is generating good profits relative to sales and shareholder investment.

• Liquidity: Analyse current ratio and quick ratio to assess if the company can meet short-term debts.

• Solvency: Look at debt-to-equity ratio to understand how much debt the company is using versus equity.

• Market Performance: Check stock price trends, dividend history, and market capitalisation.

International Context

Discuss how the company’s international operations affect its financial performance, including currency risk, global market exposure, and economic conditions in key markets.

Conclusion and Recommendation

Summarise the company’s financial health and international standing. Recommend whether to invest based on the analysis, highlighting strengths and potential risks.

Report 2: Project Appraisal of High-Speed Rail Between London and Manchester

Introduction

This report appraises the proposed high-speed rail project between London and Manchester. It evaluates the project’s expected costs, benefits, and financial viability using methods like Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.

Project Costs and Benefits

• Costs: Initial capital expenditure, ongoing maintenance, and operating costs.

• Benefits: Time savings for passengers, increased economic activity, environmental benefits, and potential revenue from ticket sales.

Financial Evaluation

• NPV: Calculate the present value of future cash flows minus initial investment to assess profitability.

• IRR: Estimate the rate of return where NPV equals zero.

• Payback Period: Determine how long it will take to recover the initial investment.

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