1. Ratio analysis is a key method of interpreting financial accounts. Choose five ratios that can be used to interpret published financial statements and discuss what they reveal about the company.

Element 010 Case study - 100%

Task: You have been appointed as the Management Accountant of Thomas Cook. Download the Annual Report for 2018 (data available through the Fame database).

1. Ratio analysis is a key method of interpreting financial accounts. Choose five ratios that can be used to interpret published financial statements and discuss what they reveal about the company. Evaluate how useful your company would find these ratios as a potential lender in determining whether to lend money to Thomas Cook. (1,000 words) - 30 marks

2. Thomas Cook is keen to (cash) budget more effectively to manage liquidity risk. Provide a briefing note to your company’s board outlining the purpose and objectives of budgeting and provide guidance for this company on how to set their annual budget. Also outline and appropriate system of budgetary control and monitoring for this company. (1000 words) - 30 marks

3. Thomas Cook has made a number of unsuccessful investment decisions. Evaluate how break-even analysis and net present value could have been used by Thomas Cook to decide whether to invest in the expansion of the business. (1000 words)- 30 marks

Presentation skills; Harvard referencing - 10 marks

Marking scheme

Question 1 Identification and analysis of 5 relevant ratios and description of what they reveal about a company. - 20 marks Evaluate the uses and limitations of the chosen ratios in relation to this company’s situation. - 10 marks

Question 2 Purposes and objectives of budgeting. - 10 marks Guidance on budget setting for this company. - 10 marks Discussion of appropriate budgetary control and monitoring system. - 10 marks

Question 3 Discussion of information needed to calculate break-even and net present value. - 10 marks An analysis of how break-even and net present value can be used to make decisions on business expansion. - 20 marks Presentation skills; Harvard referencing - 10 marks Other skills and competencies: communication (written), data handling