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You work as a finance supervisor in the head office of a retail company. Finance executive of the company is interested in buying shares in one of two companies (Sainsbury and Tesco PLC).

Assessment Brief 2

Managerial Finance LSBM203

1. Module Details

Module Name:

Managerial Finance

Module Code:

LSBM203

Level

5

Credit Value

30

Module Leader:

 

Academic Year

2020-21

2. Assessment Structure

Item of Assessment

Portfolio

Weighting

This assessment is worth 60% of the module grade

Word Limit

3,000 words

Submission Deadline

 

Acceptable Formats for Submission

Microsoft Word

Feedback and Provisional Grade1

Feedback and provisional grades will normally be due 20 working days after the submission deadline

Resubmission Date

 

3. Assessment 2 Details

3.1 Task

The assignment consists of two portfolios – Portfolio 1 consists of 70 marks and Portfolio 2 consists of 30 marks. Students are expected to read both Portfolios thoroughly and to answer all the required questions in a structured and organised manner.

Portfolio 1:

You work as a finance supervisor in the head office of a retail company. Finance executive of the company is interested in buying shares in one of two companies (Sainsbury and Tesco PLC). You have been asked to assist the finance executive in making such decision.

(i) Sainsbury PLC

Sainsbury`s is the third largest chain of supermarkets in the United Kingdom and it was founded in 1869, by John James Sainsbury with a shop in Drury Lane, London. The company became the largest retailer of groceries in 1922 and was an early adopter of self-service retailing in the United Kingdom. Sainsbury`s ranges from groceries and clothing to homewares, electricals and more. More information can be found through Sainsbury`s website and a recent annual report at the link below: https://www.about.sainsburys.co.uk/~/media/Files/S/Sainsburys/documents/reports-and- presentations/annual-reports/sainsburys-ar2019.pdf

1 The grade is provisional until confirmed by the relevant assessment board(s). Your work will be marked in grades rather than percentages. This is considered to deliver the most accurate and fair outcomes for students. Each assessment that you undertake will be assessed using the common grading system. Information about the grading system can be found in your Student Handbook, Section 10.

The Grade Criteria can be found in Appendix C of your Student Handbook.

(ii) Tesco PLC

Tesco Plc trading as Tesco, is a British multinational groceries and general merchandise retailer with headquarters in the United Kingdom. It is the third-largest retailer in the world measured by gross revenues and ninth-largest retailer in the world measured by revenues. It has shops in seven countries across Asia and Europe and is the market leader of groceries in the UK, Ireland, Hungary and Thailand. Tesco was founded in 1919 by Jack Cohen as a group of market stalls. The first Tesco shop opened in 1931 in Burnt Oak, Barnet. His business expanded rapidly, and by 1939 he had over 100 Tesco shops across the country. More information can be found through the Tesco website and a recent annual report at the link below:

https://www.tescoplc.com/media/476423/tesco_ar_2019.pdf

Required:

Prepare a report for potential investors which analyses the financial information for both companies and give recommendations which company would be a suitable option for investment.

a) Calculate 10 financial ratios as given below for two years (2018 and 2019)

Current ratios

P/E ratio

Quick ratios

Earnings per share

Net Profit Margin

Return on capital employed

Gross Profit margin

Average inventories turnover period

Gearing ratios

Dividend pay-out ratio


(15marks)

b) Analyse performance, financial position and investment potential of both companies. You should use charts to compare performance of two companies. You will need to look at the audited financial statements and carry out further research to explain the performance of each company for two years.        (35 marks)

c) Provide recommendations of how the financial performance of the poorly performing business can be improved                                                                                                                        (10 marks)

d) Discuss the limitations of relying on financial ratios to interpret a company’s performance

(10 marks)

(Total: 70 marks)

(You are expected to search for more information on both companies and cite the material correctly)

Portfolio 2:

Capital Investment Appraisal:

The following information relates to Ross Hill limited. The company has an opportunity to invest in one of two potential & mutually exclusive (but not both) projects. Each project will involve the purchase of a new Plant. The following data relates to the two projects:

Net Profit

Project A

Project B

 

Plant 1

Plant 2

2020

45,000

10,000

2021

45,000

15,000

2022

45,000

25,000

2023

35,000

55,000

2024

35,000

65,000

2025

25,000

50,000

 

230,000

220,000


Additional Information:

  • The initial cash investment for both plants will be £11,0000. The purchase would take place on January 1, 2020. It is assumed that all other cash flows would be received on 31 December each year.
  • Both plants would have a life of six years. Plant 1 has no residual value and plant 2 has a residual value of £8,000.
  • The company uses a straight-line method of depreciation.
  • The cost of capital is 16%.

Required:

a) Using appropriate investment appraisal techniques, advise senior management on whether they should opt for project A or project B.                                                                                       (20 Marks)

 b) Discuss the limitations of using investment appraisal techniques in long term decision making.

(10 Marks)

(Total: 30 marks)

3.2 Submission requirements

You must submit your assignment by using the Turnitin gateway in the module’s Canvas site.

Please Note: When you submit you will be asked to confirm you have referred to the Submission Checklist (see Appendix 1) and the act of submitting your work electronically will be taken as an acceptance of the Declaration of Authorship (see Appendix 2)

4. Learning Outcomes for the assessment

This item of assessment covers the following learning outcomes. For the full list of learning outcomes for the module, please refer to the Module Study Guide.

  • Understand and evaluate relevant accounting and finance regulatory frameworks.
  • Comprehend and critique the key accounting and finance techniques, principles and functions.
  • Interpret and analyse financial statements.
  • Through a process of analysis and evaluation, identify and recommend sources of finance to an organisation.
  • Identify, evaluate and apply investment appraisal techniques.
  • Develop financial numeracy.
  • Develop problem solving skills.

Appendix 1: Submission Checklist

  1. Have you checked Canvas messages/announcements for any additional/final details of the assessment?
  2. Are you submitting in the correct submission area e.g. if it is a resubmission of your second assignment it should be ‘AS2R’?
  3. Make sure you are submitting the correct final version of your work.
  4. Have you kept to the word limit? Remember, anything greater than 10% above the word count will not be marked.
  5. Have you addressed the assessment requirements as outlined in the Assessment Brief?
  6. Have you spell checked and proofread your work?
  7. Is your work formatted correctly and consistently?
  8. Are you submitting a document in the correct format?
  9. Is your work written in an appropriate academic style?
  10. Have you checked your citations and Reference List/Bibliography?
  11. Have you submitted your work to get a similarity report to check you have paraphrased where required?
  12. Have you read the Declaration of Authorship (Appendix 2)?

Appendix 2: Declaration of Authorship

By submitting this work electronically to Bloomsbury Institute and the University of Northampton, I confirm that I have read and understood the Declaration and Definitions below.

Declaration of Authorship:

  1. I hold a copy of this assignment which can be produced if the original is lost/damaged.
  2. This assignment is my original work and no part of it has been copied from any other student’s work or from any other source except where due acknowledgement has been made.
  3. No part of this assignment has been written for me by any other person except where such collaboration has been authorised and as detailed in the Assessment Brief.
  4. I have not previously submitted this work for any other course/module.
  5. Where applicable, I have included a declaration confirming external editorial or proof-reading services (see Appendix 3).

Definitions

I understand that:

  1. Plagiarism is the presentation of the work, idea or creation of another person as though it is one’s own. It is a form of cheating and is a serious academic offence which may lead to expulsion. Plagiarised material can be drawn from, and presented in, written, graphic and visual form, including electronic data, and oral presentations. Plagiarism occurs when the origin of the material used is not appropriately cited.
  2. Collusion is working with someone else on an assessment task which is intended to be wholly your own work.
  3. Contract cheating/Commissioning is where you contract out an academic assessment to writers and purchase back the finished work and submit it as your own.
  4. Duplication/Replication is submitting the same material more than once for the purposes of obtaining academic credit.
  5. Fabrication refers specifically to the falsification of data, information or citations in an academic exercise, typically an assignment. This includes false excuses for missing deadlines and false claims to have submitted work. It may be specifically referred to as falsification.
  6. My completed assignment is submitted and checked for plagiarism through the use of plagiarism detection software called Turnitin.

Please note: Submitting work which is not your own and/or cheating in exams can be considered as fraud2 and handled in accordance with the University of Northampton’s Academic Integrity and Misconduct Policy. Penalties can include:

  • Reduction in grade for assignment.
  • Grade for module reduced to AG [fail for academic misconduct] and right to repeat module withdrawn.
  • Termination from studies.

Further information on plagiarism can be found in your Student Handbook, Section 10.

2 If a student is suspected of commissioning (e.g. paying someone to write an assignment for them), this could be classed as fraud under student disciplinary procedures, separate to academic misconduct procedures. If proven, the consequences would be severe, including removal from their course of study.

Appendix 3: Use of external editorial or proof-reading services

The University of Northampton’s Academic Integrity and Misconduct Policy (Sections 4.10 – 4.14) provides clear guidance on the use of proof-readers to check your work.

What you need to know:

  1. You can ask your tutors or our Learning Enhancement and Employability (LEE) Team (lee@bil.ac.uk) for advice and support on how to proof your work.
  2. Proof-readers should not make live changes to your work. They should only indicate where possible changes could be made.
  3. A proof-reader should not change the meaning of your work in any way.
  4. If a proof-reader’s comments or amendments do change the meaning of your work, this may be deemed as academic misconduct.
  5. If you do use a proof-reader you must declare this clearly when you submit your work. The declaration should be on the first page (cover page) of your assignment.

Example declaration:

“A proof-reader has helped me with this assignment. The proof-reader was my friend/name of proof-reading service/a family member/other. I have kept a copy of my original work with comments from the proof-reader.”

For more information please go to the policy itself, which is available in the Quality Enhancement Manual on our website.

Appendix 4

Continues.........


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